Growing foreign presence in Vietnam's stock exchange

In July, SK Investment Vina III – the largest shareholder of pharmaceutical firm Imexpharm – acquired Red Capital – the parent company of KBA Investment which holds a 7.4 per cent stake in Imexpharm.

The move helped the South Korean investor to scale up its ownership in Imexpharm from 46.6 per cent to 53.9 per cent.

The deal also helped turn Imexpharm into a subsidiary of SK Investment Vina III.

The stock market expects to welcome new foreign firms in the coming time

The South Korean firm is set to raise its ownership rate in Imexpharm further to 55 per cent through tender offers in the stock exchange in the coming time, having been approved by Imexpharm’s Management Board in mid-August.

In mid-April, Indorama Netherlands BV – a member of the world’s largest PET resin maker, Indorama Ventures from Thailand – wrapped up purchasing a 97.8 per cent stake in Ngoc Nghia Industry-Service-Trading JSC currently listed on the unlisted public company market (UPCoM).

With a bid price of $1.13 apiece, the buyer spent around $90.9 million to become the parent company of Ngoc Nghia JSC from mid-April. The Board of Management at Ngoc Nghia JSC experienced a reshuffle on May 11.

Another big player from Thailand, TCG Solutions Pte., Ltd. – belonging to Thai Containers Group Co., Ltd., which is a member of the leading Thai conglomerate SCG – acquired Bien Hoa Packaging JSC in late 2020.

SCG, through its subsidiary Nawaplastic Industries Co., Ltd., previously invested in Vietnam’s leading plastic firms – Binh Minh Plastics JSC and Tien Phong Plastic JSC (NTP).

However, later SCG totally divested from NTP while raising its ownership in BMP to a ruling rate of 54.4 per cent in late 2019.

The number of listed firms with foreign investors holding 51 per cent or more of their charter capital on the Vietnam stock exchange has significantly increased in recent years via the mergers and acquisitions path.

The past five years, however, did not see any new firms with the engagement of major foreign shareholders on the stock exchange.

As of now, there are a total of 11 businesses with foreign shareholders holding at least 51 per cent of the charter capital on Vietnam's stock exchanges.

As of June 30, the market cap of this group came to $6.4 billion, equal to 2 per cent of total market capitalisation (including HSX, HNX and UPCoM).

No new foreign direct investment (FDI) firms have made their debut on the Vietnam stock market in the past five years, but there are hints of FDI firms who envisage doing so in the coming time.

Vietnam stock market remains attractive to foreign investors Foreign investors net purchased 14.8 million stocks, worth some 80 billion VND (3,42 million USD) during the week from August 8 – 12, showing that the Vietnamese securities market remained attractive to them.

Indian investors likely to expand presence in Vietnam About 21 per cent of Indian companies that have operations in Southeast Asia or expect to do so in the future also have plans to expand their business in Vietnam in the next two years, according to the HSBC Navigator survey.

In late November, leaders of Japan’s retail giant AEON Group mentioned their plans to list stock on Vietnam’s stock market.

This April, the Management Board of Charoen Pokphand Foods – the parent firm of C.P Vietnam – greenlit C.P Vietnam to begin procedures to become a public company and submit to make its debut on the Ho Chi Minh City Stock Exchange.

If these plans go through, it will help to augment the proportion of listed firms with foreign shareholders retaining a majority stake.