Big firms eye IPO, likely to shake up Vietnam stock market

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Foreign investors are among those looking forward to the privatization of Vietnam Airlines and other large firms

A rash of privatizations by large firms, many of them state-owned, is set to happen this year.

Construction materials producer Viglacera plans to make an IPO by February end, offering 76.9 million shares at VND10,300.

Bach Dang Construction Corp also plans an IPO this quarter, while textile and garment group Vinatex is likely to make its much-delayed IPO later in the year. All three are state-owned.

The Ministry of Transport has announced plans to sell shares of 11 of its firms this year, which have received a positive response from the stock market.

They include Vietnam Airlines and automaker Vinamotor, and investors  are cheering since both are high-profile firms which consistently report high profits.

Last year Vietnam Airlines made pre-tax profits of VND533 billion ($25.3 million), a third higher than targeted.  

Le Hoang Anh, director of investment firm Dragon Capital, said it is good to see the government’s determination to privatize large state firms.

The Vietnamese stock market has only seven listed firms with market capitalization in excess of $1 billion each and 54 in excess of $100 million.

This means foreign investors, who always have a preference for large firms, have few options, he said, adding that they often buy stocks worth at least $10-20 million.

Nguyen Hoang Hai, general secretary of the Vietnam Association of Financial Investors, said IPOs by many large businesses would attract investors, especially strategic ones who are likely to ink huge deals.

The financial market would then become lively, he said.

But since IPOs and listings can be separate processes in Vietnam, analysts are concerned about possible listing delays.

The country has seen around 200 companies delay their listing, including giant lender BIDV, which made its IPO in 2011, and state-run beverage firm Sabeco, which registered for a listing on the Ho Chi Minh Stock Exchange six years ago.

According to analysts, both public and private businesses have been dawdling over listings either due to apprehension about the economy or concerns about having to improve their transparency, which could result in less profits.

Anh of Dragon Capital called for transparent and concrete listing plans since the companies making the IPOs are likely to have huge market caps.

Nguyen Van Thuan of the Open University in HCMC, agreed, adding that the market’s increased expectations for state firms after their listing would force them to perform better.

Improving the efficiency of the public sector is the “real target” of privatization, he said.

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