Uncertain funding at Vinaconex auction

It is unsure how registered buyers plan to actually pay for their Vinaconex shares

On November 22, the State Capital Investment Corporation (SCIC) will put its entire stake, equivalent to nearly 254.9 million shares or 57.71 per cent of Vinaconex’s charter capital, on sale with the initial price of VND21,300 apiece. SCIC expects to acquire VND5.43 trillion ($236.08 million) from the sale.

Domestic and foreign investors and financial intermediaries will be invited to bid for the shares. Financial intermediaries will need to divulge the number of foreign investors they represent as well as the number of shares purchased to ensure foreign investment caps are adhered to.

The foreign ownership limit in Vinaconex is 49 per cent.

On November 15, the Hanoi Stock Exchange (HNX) released the names of three companies and one individual registering to join the auction for Vinaconex. They are Star Invest Co., Ltd., An Quy Hung Limited Company, Thang Long Infrastructure Investment Joint Stock Company (TJC), and individual Nguyen Van Dong.

However, it remains a question how these investors are planning to mobilise the VND5.4 trillion ($234.7 million) capital for the auction as their companies seem to be far too small for the task.

First of all, Star Invest has just been established on November 9 with the charter capital of VND200 billion ($8.6 million). The director, Dang The Anh, is only 33 years old.

An Quy Hung, established in 2001, has the charter capital of VND360 billion ($15.6 million). The company has total assets of VND1 trillion. In 2017, it reported VND956 billion ($41.56 million) in net revenue and VND62.4 billion in after-tax profit.

TJC was established in 2008 with the charter capital of VND250 billion ($10.8 million). By the end of 2017, TJC had an asset value of VND257 billion ($11.1 million). Its net revenue reached VND2 billion ($85,837) while it reported an accumulated loss of VND2.8 billion ($120,172) – all numbers far below the trillion-dong threshold.

Additionally, it is part of a joint venture that will co-operate with Airport Corporation of Vietnam (ACV) to invest and construct the new terminal T4 for Tan Son Nhat International Airport, which will require immense capital.

The Danang International Terminal Investment and Exploitation Joint Stock Company (AHT) – TJC alliance will partner up with ACV to launch a project company to construct the terminal with the investment capital of some VND4 trillion ($177 million). Besides, the Ministry of Transport also approved TJC to develop the parking area and commercial service centre for Noi Bai International Airport. However, there is no updated information about these two projects. All these mega infrastructure projects will cost a pretty penny for TJC, and it is questionable where the company will find the capital to execute all these engagements.

The only individual Nguyen Van Dong registered to buy entire share volume on offer, suggesting he’s got some very deep pockets.