Vietnam to accelerate privatization with share-sale reboot

Bloomberg

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Vietnam to accelerate privatization with share-sale reboot
Vietnam plans to set up a working group to help spur share sales of state enterprises as the government takes steps to bolster a flagging privatization program and drive economic growth.
“It will help state companies sell stakes more successfully,” Dang Quyet Tien, deputy general director of the finance ministry’s corporate finance department, said in an interview on Oct. 24. “What’s the point of pushing the IPOs out only to see them fail; we aim to avoid the failures that happened earlier this year.”
Prime Minister Nguyen Tan Dung had outlined a revamp of state enterprises to spur growth in an economy on course to expand below 7 percent for a seventh straight year. The privatization plan has lagged the government’s target, with only 71 state-owned companies selling shares in the nine months through September, compared to a goal of 200 by year-end.
“There are a lot of problems with IPOs for the working group to focus on,” said Michel Tosto, head of institutional sales at Viet Capital Securities in Ho Chi Minh City. “I am skeptical. Perhaps the government needs to hire professional securities firms to take charge of IPOs.”
The working group will comprise members from the finance ministry, the State Securities Commission and the two stock exchanges in Hanoi and Ho Chi Minh City, Tien said in his office in Hanoi. It will be established “in the near future,” he said, without giving a specific time frame.
The dong was little changed at 21,275 against the U.S. dollar as of 11:27 a.m. local time. The benchmark VN Index fell 0.2 percent. It has gained about 17 percent this year.
Lacking disclosure
Vietnam’s economy expanded 5.62 percent in the nine months through September from the same period a year earlier, data showed last month. The government aims to boost full-year growth to 5.8 percent in 2014 and 6.2 percent next year.
Officials announced a plan in February to sell shares in as many as 432 state enterprises by the end of 2015. Of the 36 companies that have held initial public offerings through Sept. 22, trading is yet to start in any of them. Vietnam has raised 3.14 trillion dong ($148 million) from these sales, compared to a target of 4.74 trillion dong.
Dung last month issued a regulation compelling state companies to list shares more quickly following their IPOs. It also requested State Capital Investment Corp., a government investment arm, to buy stakes in firms with failed offers.
The state IPOs have been criticized for lacking disclosure, Tosto wrote earlier in a note dated Oct. 13. There also isn’t a process “that would allow investors to educate themselves about the companies going for an IPO,” he said.
The working group will scrutinize companies’ preparation and “flag any problems that would potentially cause the IPO to fail,” Tien said. It will invite analysts from securities firms to weigh in, ensure the pricing is appropriate, help firms better market the offers and “actively approach” potential investors, he said.
“Failed IPOs erode investors’ confidence and hurt future IPOs,” Tien said. “The sooner we form this working group, the better we can help companies to quicken stake sales and IPOs.”

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