Viglacera woos investors as gov’t eases ownership caps


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A worker arranges unburnt bricks at a factory of the Viglacera Bim Son Holding Company in Thanh Hoa Province

Viglacera Corp., Vietnam’s biggest construction materials producer, plans one of the largest foreign stake sales by a state-owned company to help triple export revenue in the next five years.

Hanoi-based Viglacera will sell stakes of 10 percent to 20 percent each to three foreign strategic investors, Chairman Luyen Cong Minh said in an interview March 3. The company, which makes glass and tiles and exports to more than 40 countries, expects annual revenue from shipments to reach as much as $100 million by 2019, from $30 million.

“Foreign partners will help us increase the quality of products, creating favorable conditions for us to export to other markets as well as supporting domestic consumption,” Minh said in his 17th floor office overlooking the Hanoi skyline.

More Vietnamese companies are seeking foreign partners to raise capital as economic growth quickens and the state loosens ownership restrictions. Bank lending remains tight after the government stepped in last year to buy bad loans as the level of non-performing debt was the highest in Southeast Asia. Vingroup JSC, the country’s largest property developer, said last year that Warburg Pincus LLC was leading a group to invest as much as $325 million.

Foreign investors

“Foreign strategic investors are able to add capital adequacy, distribution channels and market savvy when they make intelligent strategic alliances,” Patrick Mitchell, head of institutional sales at VinaSecurities JSC, said.

Viglacera plans to sell stakes to a financial company, a technology partner and a third investor that will help it with exports. It has been in talks with a Japanese financial company and Minh expects those negotiations to be completed this year. He declined to name the company.

Policy makers in Vietnam issued a decree on Jan. 6 allowing strategic foreign investors to take a 20 percent stake in banks, up from 15 percent. The Ministry of Finance has submitted a plan to Prime Minister Nguyen Tan Dung that would lift the limit on foreigners’ holdings of voting shares in some industries to 60 percent from 49 percent.

Prime Minister Dung has urged 432 companies to sell stakes over the next two years as the Vietnamese government accelerates the sale of assets. Restructuring state-owned enterprises is a “central political task” for the government, industries and companies, according to a statement on the government’s website Feb. 18.

Stock listing

Viglacera is still in talks over its own sale, part of an equitization process in which it raised about VND200.6 billion (US$9.5 million) in an initial public offering last month. The shares may be listed on the Hanoi Stock Exchange in the third quarter of 2015. The company, founded in 1974, plans to gradually reduce the state’s holdings to less than 51 percent from the current 75 percent, Minh said.

State-run Vietnam JSC Bank for Industry and Trade, known as VietinBank, sold a 20 percent stake to Mitsubishi UFJ Financial Group Inc. in 2012 for VND15.5 trillion after selling a 10 percent stake to the International Finance Corp. for $182 million a year earlier. In 2012, PVI Holdings sold a 31.8 percent stake to Germany’s Talanx AG in two transactions. State-owned Vietnam Oil & Gas Group holds 37 percent of PVI’s shares.

Viglacera is targeting average revenue growth of 10 percent to 20 percent a year in the next five years, Minh said. He forecast unconsolidated pretax profit will more than double to VND300 billion this year. The corporation’s consolidated revenue is expected to rise to VND11 trillion from VND10.5 trillion last year.

Export expectations

Vietnam’s benchmark VN Index has jumped 14 percent this year, the most among Asian markets tracked by Bloomberg. The gauge climbed 22 percent last year, the most since 2009, as international investors bought a net $263 million of local shares amid growing appetite for the least-developed markets.

The government predicts the economy will quicken to 5.8 percent this year, up from 5.42 percent in 2013. The central bank is aiming for credit growth of 12 percent to 14 percent this year, compared to as high as 30 percent in 2010. Vietnamese banks have the highest rate of bad debt among the six Southeast Asian countries covered by Fitch Ratings, according to the company.

Viglacera currently exports to countries including South Korea, Australia, Russia and neighboring Southeast Asian nations, Minh said. Exports currently comprise about 5 percent of revenue, he said.

“Exports have yet to meet our expectations,” he said.

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