Vietnam Airlines closes in on IPO

“The two ministries will need to assess the value of Vietnam Airlines before March 25 and from there the Government Office will summarise their reports and submit them to the prime minster for consideration,” said Pham Viet Muon, Deputy Chairman of the Government Office.

Vietnam Airlines chairman Pham Viet Thanh said “The foreign partners we have met are all awaiting the assessment of our company’s value before deciding whether they will become our strategic partner or not.”

In early March 2014 the Ministry of Transport (MoT) released a statement reporting Vietnam Airlines’ enterprise value after the State Audit of Vietnam released its own assessment and a plan to announce the value of the parent company.

Based on audited records, by the end of March 2013 Vietnam Airlines was valued at VND57.156 trillion ($2.74 billion), including VND10.567 trillion ($507 million) of state capital.

The corporate value  results show the national flag carrier was worth just about the same, VND57.047 trillion ($2.74 billion), but that state capital was actually VND23.493 ($1.1 billion).

In valuating the carrier’s fleet (both aircraft it owns and those leased from foreign firms), the MoT put these assets at around VND37.6 trillion ($1.8 billion) as of March 31, 2013, down against the original assessment of VND53 trillion ($2.52 billion).

“The MoT has proposed the government allow Vietnam Airlines to use its parent company enterprise value as a base to set the initial stock price and in its negotiation with foreign and domestic strategic partners,” said a MoT source.

The government is now tasked with making a final decision.

Vietnam Airlines is one of the key businesses under the MoT and is reportedly set to complete parent company equitisation before the end of 2014.

The plan is for the firm to finalise its equitisation plan and chartered capital structure within a month after announcing its enterprise value, complete its IPO and sale of preferred shares to employees within three months after its equitisation plan is approved and build criteria for selecting strategic partners and complete its database for selling stock to strategic partners within the second half of this year.

“At the same time, Vietnam Airlines will handle preparations for its equitisation while also scaling up production and business efficiency to ensure the success of the upcoming IPO,” said Thanh.