Mekong Capital to divest Loc Troi

On the heels of Loc Troi's impending listing, Mekong Capital considers swift divestment

Loc Troi to be listed

Loc Troi plans to be listed on UPCoM by issuing 67.2 million stocks on July 24 with a total registered value of VND672 billion ($29.6 million). The reference price for each share in the first trading session is expected to be VND55,000 ($2.42).

Loc Troi has the chartered capital of VND672 billion ($29.6 million) and mainly specialises in three fields, plant protection, seedling supply, and food processing. Loc Troi holds the leading position in the field of plant protection with 20 per cent of the market share and it has a wide network of 26 branches and more than 5,000 agencies all over Vietnam.

Regarding the shareholder structure, the An Giang People’s Committee holds 24.15 per cent of Loc Troi’s stakes, five foreign shareholders hold a total of 44.04 per cent, Loc Troi’s staff hold 15.31 per cent, while the remainder belongs to other organisations and individuals in Vietnam.

In 2016, Loc Troi generated more than VND7.8 trillion ($343.2 million) and earned VND349 billion ($15.4 million) in after-tax profit, which was equivalent to the earning per share (EPS) of VND4,382 ($0.19).

In 2017, the company set a net revenue target of nearly VND8.3 trillion ($365,2 million) and after-tax profit of VND460 billion ($20.24 million), a growth of 28.7 per cent compared to 2016. It targets to gain an EPS of VND5,822 ($0.26) and pay shareholders 30 per cent dividend in cash.

Also, Loc Troi targets to reach the capitalisation of $1 billion in 2021, hold 30 per cent of the market share in plant protection products, and become the number one rice brand in Vietnam.

Huynh Van Thon, chairman of Loc Troi, said that the company is gradually completing its agricultural value chain, from research to production and sales of main agricultural products, such as rice and coffee.

Mekong Capital withdraws

Recently, Loc Troi is not only in the centre of attention for its listing on UPCoM, but for the scheduled divestment of Mekong Capital, a big foreign shareholder since 2008.

In particular, Vietnam Azalea Fund managed by Mekong Capital, will withdraw its capital from Loc Troi after it is listed on UPCoM. This was confirmed by Mekong Capital’s representative, saying, “Detailed information will be officially published in the coming period.”

Many people may wonder about this divestment, as it comes on the heels of Loc Troi’s listing.

Mekong Capital’s divestment is normal. For example, Mobile World Investment Corporation (Ticker MWG on HoSE) was listed in 2014, but Mekong Enterprise Fund II Ltd., managed by Mekong Capital, partly divested from this enterprise in 2013. However, Mekong Capital still holds a certain number of MWG shares after it was listed.

Until September 2016, Mekong Capital continued to gradually withdraw from Mobile World. By April 2017, the fund's stake has declined to 5 per cent and it quit being a big shareholder of Mobile World.

In other enterprises, Mekong Capital also held stakes for quite a long time after they were listed. For example, FPT Corporation was listed in 2006, but Vietnam Azalea Fund only finished withdrawing completely in May 2017.

Similarly, Nam Long Investment Corporation was listed in 2013 and was divested in 2016. Traphaco Joint Stock Company was listed in 2008, but Vietnam Azalea Fund still holds a 25 per cent stake and is currently the second biggest shareholder of this pharma firm.

There are some speculations about why Vietnam Azalea Fund will quickly divest from many enterprises, including Loc Troi, after they are listed. The fund was established in 2007 and its operating period is expected to be ten years, meaning closing time is coming.

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