Vietnam Dairy Products JSC is willing to raise foreign ownership in the country’s biggest company by market value to the maximum level the government would allow.
“We want to open the room by the limit allowed by the government because the investment of overseas investors will not just bring capital but also advanced corporate management experiences,” said Bui Thi Huong, an executive director at the dairy producer. The company is awaiting government guidance, she said.
Vinamilk, as the Ho Chi Minh City-based company is commonly known, “welcomes” the government decree allowing foreigners to increase stakes in certain industries to as much as 100 percent from a cap of 49 percent, Huong said in an e-mailed response to questions.
Vietnamese regulators see foreign investment as one of the keys to growing the country’s stock market which is about one-eighth that of Singapore, Southeast Asia’s largest. The State Capital Investment Corp., a government investment arm, plans to divest its entire 45.1 percent stake in Vinamilk, according to a statement on the government’s website Oct. 14. That holding is worth VND57.4 trillion ($2.6 billion) at Friday’s close.
The divestment decision is “terrific” and a “great move in the right direction,” Mark Mobius, chairman of the emerging-markets group at Franklin Templeton Investments, said in an Oct. 14 interview in Bangkok.
“Liquidity is quite low, which is why this move from the government is a giant step forward," he said. "We have quite a big holding in Vinamilk and we’d probably buy more at the right price."
Vinamilk, which said it expects third-quarter earnings to exceed its target as well as meet the full-year profit projection, has participated in non-deal roadshows in Singapore and the U.S. and is going to meet other investors in Europe this quarter, according to Huong. Foreign investors currently hold 49% of the company’s shares.
Shares of the company have rallied 34 percent this year, set to rebound from a 15 percent slump in 2014, the first annual decline in six years. The gains also outpaced the 8.6 percent advance in the benchmark VN-Index. Vinamilk rose 0.9 percent as of 10:31 a.m. local time, heading for the highest close since Aug. 10.
SCIC, which holds the government’s stake in Vinamilk, hasn’t decided when it will sell the shares, Vietnam Television reported.