Flight of the vagaries

Huynh Kim Oanh, the company’s corporate finance director, said in a telephone interview with Bloomberg on November 17 that the initial share sale would be postponed from November 28, without giving a reason.

The Ho Chi Minh City-based brokerage previously planned to sell 17.6 million shares to the public for a minimum of VND15,000 (US$0.84) apiece, Oanh said on October 23.

But on November17, she said the company would instead sell 28.6 million shares to its so-called strategic partners through private placement this month at an initial price of VND40,000 per share.

The company, a brokerage unit at Saigon Thuong Tin Commercial Joint Stock Bank or Sacombank, Vietnam’s fifth-biggest listed lender by market value, announced the delay following instructions on issued by the State Securities Commission (SSC) on November 17.

According to the instructions, Sacombank-SBS had to become a joint stock company before it offers shares publicly.

‘Caught’

Dinh Hoai Chau, deputy general director of the company coded SBS, said “The delay was not what we wanted.”

“We just got caught in some problems with the procedure and need more time before we meet all the conditions.”

He argued there were genuine reasons for the delay.

“It’s not because of what’s happening on the market of because the company wanted to sell to strategic partners at high prices,” Chau was quoted by Dau tu chung khoan (Securities Investment) magazine.

Chau admitted that the company had been “careless” in announcing the initial public offering (IPO) with only a permit from SSC, saying it should have waited for SSC’s specific instructions.

However, Giang Trung Kien, head of research at HCMC-based FPT Securities Inc. (FPTS), told Bloomberg that SBSs had acted suspiciously.

“Probably the underlying reason for the delay is that the company wants to create a new price level for the IPO,” he said.

Tuong Chau, an analyst in HCMC, told Thanh Nien Weekly the delay was the “subjective decision” of the company itself.

Chau, who is also a broker, said the market had lost steam this month. “SBS saw that, and anticipating a declining market in the future, the company must have been afraid that it wouldn’t be able to sell the shares to bidders at high closing prices.”

Vietnam’s benchmark VN-Index dropped for a fifth straight day Thursday, the longest losing streak in more than four months, falling 4.1 percent, to a three-month low of 482.60.

But Hoai Chau from SBS said the delay would not cause any losses for investors.

Investors who had already made deposits for the bidding were refunded their money by Tuesday, he said, adding that the company would consider offering shares to them at the price it is going to sell to strategic partners.

Regulatory ramblings

Hoang Duc Long, head of the legal department at the State Securities Commission, said the agency didn’t have a framework yet within which to punish the SBS for the postponement. He cited Vietnam’s Securities Law, which implied that the firm had not broken any major rule as Sacombank Securities had not made any official “moves” towards the public offering, it had merely made an announcement.

Long said the company and the commission would both take responsibility for the delay, without clarifying what actions SSC would take.

He said the delay would only cause investors to lose enthusiasm, not opportunities.

Robbed

But Nguyen Hai Son, deputy director of the Broker Department at FPTS, told Thanh Nien Weekly in a telephone interview that the delay had in fact robbed investors off the opportunity to buy SBS shares at the previously announced prices.

Son said the postponement had cooled investor anticipation, which is a driving force of the Vietnamese stock market.

Lam Khoi, an investor in HCMC, wrote to Dau tu chung khoan that “even though SBS said they didn’t want to delay the public offering, it was them who caused the delay.”

Khoi said the company had already organized press briefings and announcement about the public offering to lure investors. Now that it had canceled the offering, he said, SBS should bear some responsibility.

The broker said refunding potential bidders was not enough. “SBS still owes the investors, who had been teased with the chance for the bidding and had made plans to participate, an apology.”

Source: Thanh Nien, Agencies