More IPOs anticipated in coming months

February 24, 2022 | 14:12
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Along with new stock issuances from listed firms, the market has been fuelled with lucrative initial public offerings (IPOs) from up-and-coming players.
More IPOs anticipated in coming months
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The IPOs of Ton Dong A JSC and Nova Consumer JSC are expected to land within the next two weeks. Both firms opt for applying the book-building method for price discovery.

Ton Dong A plans to offer a total of 15.3 million stocks, of which nearly 3 million would be sold to existing shareholders and the remainder to the public.

The starting price was initially set at $2.52, but in mid-February the company’s board of directors softened the starting price to $1.74, down 31 per cent due to changing market conditions. This will reduce the proceeds from this issuance to $21.5 million.

The excitement in market transactions that inspired listed firms to render additional stock issuances has also led newcomers to consider IPOs to support business expansion plans.

The company aims to use about $15 million of this sum to invest in a first-phase steel manufacturing plant with a production capacity of 350,000 tonnes per year.

The joint venture would see Ton Dong A contribute 51 per cent of the capital, and another steel firm, Posco Vietnam offset the remaining 49 per cent. The rest of the proceeds would be used to replenish capital.

According to Nova Consumer’s IPO plan, the company will sell 10.9 million shares entirely to the public at a starting price of $1.89, to raise around $20 million.

The majority of the sum would be used to acquire Sunrise Foods Co., Ltd., which owns more than 99 per cent of Anco Family Food, aiming at developing the company’s food chain.

The date for closing stock purchase orders is set on March 4. If the stock is sold out, the proceeds would amount to tens of millions of dollars based on the minimum starting price.

On February 22, Picomat Plastic JSC, a leading PVC foam board manufacturer, finalised its IPO in auction form at the Hanoi Stock Exchange. With 120 individual investors joining the auction, ordered volume surpassed what was offered by 14.6 per cent.

Through a traditional auction, the Binh Duong Trading and Development JSC (TDC), in which leading contractor Becamex holds a 60 per cent stake, also completed its IPO on the same day. With 35 million stocks on offer, only four local individuals took part in the auction, buying out 50,000 shares.

That was partly because TDC had set its starting price at 2.79 times over the stock’s face value, diminishing appeal for investors.

The excitement in market transactions has inspired not only listed firms to render additional stock issuances, newcomers have also considered IPOs to support business expansion plans.

According to Decree 155/2020/ND-CP on securities, one of the conditions for firms to list on bourse is that they need to show transactions in the Unlisted Public Company Market in at least two years unless they have organised IPOs or been equitised firms. This fresh requirement makes holding IPOs an attractive option.

In 2021, Vietnam’s stock market witnessed unprecedented growth in the number of new account openings, which was 1.5 times higher than the total combined for the four previous years.

Last year, the average stock transaction value reached $938 million and a volume of 737.3 million, equal to a 247 per cent and a 120 per cent jump respectively compared to 2020.

By Song Thuy

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