SCIC’s divestment boosts share prices, market soars

Inside SCIC’s office in Ha Noi. - File Photo

In November, the Government’s investment arm announced a series of State capital divestments from five listed companies, including Viet Nam Construction and Import-Export Joint Stock Corporation (Vinaconex), Tien Phong Plastics Joint Stock Company (NTP), Binh Minh Plastic Joint Stock Company (BMP), Domesco Medical Import - Export Joint-Stock Corporation (DMC) and FPT Corporation (FPT).

By the end of last month, SCIC had only announced the initial selling price for Vinaconex (stock code VCG), which was set at VND25,600 (US$1.12) per share, and had yet to announce bidding prices for four other companies as scheduled between November 27 and December 1.

SCIC will continue working on share offerings for these four shares, as stated at the November 17 roadshow, with no imminent disruption, a representative from SCIC told Viet Nam News by telephone, explaining it is awaiting information of companies for price announcement.

SCIC will auction 96.24 million shares of Vinaconex, equal to a 21.79 per cent stake of the company, on December 8 on the Ha Noi Stock Exchange. In the latter half of this month, it will continue offloading 37.1 per cent of capital at Tien Phong Plastic, 29.51 per cent at Binh Minh Plastic, 34.71 per cent at Domesco Medical and 5.96 per cent at FPT Corp.

Share prices of these four companies quickly attracted investors’ attention and sharply increased in value following the divestment announcement.

BMP’s share price has increased 30 per cent in the past one month, from VND73,000 per share to VND95,000 ($4.2) on November 30. FPT’s share price was up 16 per cent to VND58,400 ($2.2 to $2.59); DMC up 27 per cent from VND104,000 to VND132,000 and NTP up 17 per cent from VND72,800 to VND85,000.

This is not the first instance of the SCIC’s share offering taking a positive turn on a company’s market value.

After the SCIC’s auction of 48.4 million shares of Vinamilk on November 10, 2017, Vinamilk’s shares (VNM) increased its value from VND151,000 per share to VND173,800 ($6.7 to $7.75) with more than nine million shares being traded on the stock exchange on that day.

VNM price closed yesterday at VND203,000 per share, a montly increase of 31 per cent.

Following the success at Vinamilk, on November 29, the Ministry of Industry and Trade announced an offering of 343.7 million shares for the State-owned Sai Gon Beer Alcohole Beverage Joint Stock Company (Sabeco), equivalent to 53.59 per cent of its charter capital at initial selling price of VND320,000 ($14.2) per share.

After the divestment plan is announced, SAB shares rose sharply, from VND190,000 to VND339,000 per share ($8.45 to $15), becoming the most highly priced stock on the market, at present.

If the offering of Sabeco’s shares is successful, the MoIT will collect at least VND109.9 trillion ($4.8 billion).

SCIC has made significant progress in its divestment, as it is interested in the bidding process to increase transparency, rather than just selling a majority stake to strategic investors, as before.

The SCIC wants to promote the competitive bidding process to enhance transparency in the divestment process, so that listed companies can be exempt from making a public bid, instead of being obliged to send a written letter of interest of purchase to the auction board seven days before any auction.

In addition, SCIC is considering asking for the Government’s approval to sell a majority of shares from its divesting companies for a better price than the market’s expectation.