Foreign investor spends $29 million on stake in Tien Phong Plastic

An undisclosed buyer acquired 21.27 million shares in Tien Phong Plastic

According to newswire Cafef, Thai PVC manufacturer Nawaplastic has released that it has completed the divestment of its entire 23.84 per cent holding, equaling 21.27 million shares, in Tien Phong Plastic. The transaction occurred between September 25 and October 12.

Accordingly, Nawaplastic’s divestment attracted the attention of numerous existing shareholders as well as foreign investors. Notably, Tien Phong’s general director bought 410,000 shares, deputy general director 203,000 shares, and Southern Tien Phong Plastic JSC registered to buy 1.8 million shares. Additionally, an unidentified foreign investor completed the purchase of nine million shares for $29.3 million.

Previously, Nawaplastic’s announcement to drop Tien Phong Plastic to increasing its holding in Binh Minh Plastic came as a surprise because both Binh Minh Plastic and Tien Phong Plastic approved lifting the foreign ownership limit (FOL) to 100 per cent. Furthermore, the Thai firm earned a large profit from its investments in the two Vietnamese companies. Both Nawaplastic and Tien Phong Plastic refused to comment on this decision.

According to Robert Tran, general director of Robenny Strategic Consulting Group (headquartered in Canada) in the Asia-Pacific region and the US, the decision may have come from the internal conflict in the Board of Directors. Notably, in early July this year, Tien Phong Plastic, through its subsidiary Southern Tien Phong Plastic, struck a share sale agreement with Japanese Sekisui Chemical Company Limited.

Accordingly, Sekisui Chemical will become a strategic shareholder with a 25.3 per cent stake in Southern Tien Phong Plastic. Besides, Sekisui Chemical would have a representative on Southern Tien Phong Plastic’s Board of Directors.

Sekisui Chemical would help Tien Phong Plastic in general and Southern Tien Phong in particular manufacture products like plastic globe valves, coils, and resistance welding parts which are not made in Vietnam at the moment.

Sekisui Chemical can rely on Tien Phong's nationwide distribution network to sell its products in Vietnam, and in return, the Japanese firm will transfer technology to its local partner.

The co-operation between Sekisui Chemical and Tien Phong Plastic made Nawaplastic unhappy. At the time, Nawaplastic intended to buy more of State Capital Investment Corporation (SCIC)’s stake in Tien Phong Plastic to hold controlling rights.

However, SCIC had yet to issue a specific divestment plan, while Tien Phong Plastic’s plan to lift its foreign ownership limit had yet to be approved at the time. This has created more momentum for Nawaplastic’s decision to withdraw from Tien Phong Plastic.

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