SOEs poised to add muscle to fledgling stock market

“We are selecting some SOEs that are to be equitised to make initial public offerings (IPOs) via the Ho Chi Minh City Securities Trading Centre. The process will be complete by the end of this month,” the board’s deputy head, Tran Ngoc Phuong, said.
Phuong declined to name the SOEs under consideration, but said to be eligible, a company should have chartered capital of at least VND15 billion (about $1 million) and be making a profit.
“After the candidates are selected, deputy mayor Mai Quoc Binh will meet board and bourse officials to discuss the auction in detail.”
The move aims to hasten the city’s SOE equitisation, provide equal access to investors, prevent possible losses and generate interest in the stock market.
Under Decree 64, issued in mid-2002, IPOs should be underwritten by securities firms or financial institutions before they are sent to the stock exchange.
The decree requires equitised SOEs to establish a board for asset evaluation. Institutional underwriters will not be allowed to sit on the asset evaluation panel, but can check the board’s reports on evaluation.
Equitisation experts said the auction technique would eventually come to be regarded as an efficient method of asset disposal, ensuring shares were allocated in an equitable and impartial way.
Stock exchange director Tran Dac Sinh said the centre had installed a computerised system for the auction which was linked to 11 securities companies, and could handle a large volume of orders with high accuracy.
“The advantage of selling shares via the Securities Trading Centre is that the auction will benefit potential investors in big cities where securities firms are present, while auctioning shares through an intermediary financial institution as currently practiced may limit the participation of far-away investors.”
“With the support of authorised payment banks, handling the money would be smooth, simple and safe,” he said.