Vietnam Airlines to launch IPO on Nov 14

October 20, 2014 | 10:06

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The national flagship carrier Vietnam Airlines (VNA) will officially launch its initial public offering (IPO) on November 14, 2014, according to Ho Chi Minh City Stock Exchange (HoSE).

According to the equitization plan for Vietnam Airlines that was approved by the Prime Minister on September 10, the state capital in VNA will be maintained, while more shares will be issued to raise the charter capital of VNA.

The representative body of the state capital in Vietnam Airlines is the Ministry of Transport, according to the plan.

VNA will have a charter capital of VND14.101 trillion ($662.75 million) after equitization, equivalent to more than 1.41 billion shares with a par value of VND10,000 per share.

The share structure for the IPO is that the state holds 75 percent stake, while 20 percent will be sold to strategic investors.

Meanwhile, some 49 million shares, equivalent to 3.465 percent, will be set aside for public auction, while the rest will be sold at incentives for VNA’s employees and the members of its trade union.

Earlier this year, Pham Viet Thanh, chairman of Vietnam Airlines Corp, which operates Vietnam Airlines, said the company the IPO was set for the second quarter and hoped the company would completely go private by the end of this year.

VNA planned to raise US$200 million by selling 383 million shares in the IPO, he said, adding that these figures were only estimates.

Under a policy approved by the government, in the first phase after the IPO, the government will hold 70 to 75 percent stake of VNA. The remaining shares are available for strategic investors and the public.

Vietnam Airlines Corp suffered a loss of over VND600 billion ($28.2 million) in 2013 due to foreign exchange fluctuation, according to Bank for Investment and Development of Vietnam Securities Joint Stock Co (BSC).

In the 2008-2013 period, the Vietnam dong had a tendency to devalue against the US dollar, thus raising the cost of fuel for Vietnam Airlines as the jet fuel purchase price were mainly affected by exchange rate fluctuations, import duty and environmental tax.

In addition to the risk of exchange rate fluctuations between the dong and the greenback, VNA also faced the risk of dong devaluation against other currencies, said BSC.

According to the disclosure of Vietnam Airlines Corp, during the 6-year period before equitization, VNA achieved the highest profit of VND314 billion in 2010 and the lowest of VND36.6 billion in 2011.

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