Vietnam National Textile & Garment Group, the nation’s largest textile manufacturer, missed its fundraising target in an initial public offering on Monday amid lack of clarity on when the shares would be listed.
The state-owned company, known as Vinatex, raised VND1.216 trillion (US$57.3 million) from the sale of 110.6 million shares at an auction organized by the Ho Chi Minh City Stock Exchange, according to results posted on the bourse’s website. The company had offered about 122 million shares, after delaying the sale for two months amid lackluster demand.
Chief Executive Officer Tran Quang Nghi said at a road show in July that trading in shares could take one to two years. Monday’s response underscores the challenge facing Vietnam’s privatization program, which has lagged targets as money managers avoided new issues amid concerns that the shares will be illiquid.
“This is a pessimistic result, reflecting investors’ lack of interest in the company,” Bui Van Tot, a Ho Chi Minh City-based analyst at FPT Securities JSC, said by phone. Lack of clarity on the listing date also deterred investors, he said.
While 36 Vietnamese companies have held IPOs since the government announced a plan in February to sell shares in as many as 432 enterprises by the end of 2015, trading has yet to start in any of them. The government has raised VND3.14 trillion this year, compared with its target of VND4.74 trillion, as some companies brought their offerings without any prior marketing to investors.
Starting November 1 this year, companies conducting IPOs must register shares on the official UpCom over-the-counter market within 90 days of receiving business registration certificates, according to a decision issued by Prime Minister Nguyen Tan Dung on the government’s website.
Shares must then begin trading on one of the country’s two main stock markets in Hanoi or Ho Chi Minh City within a year of certification.
The poor investor demand came even as Vinatex is a “portal” for investors who want an exposure to Vietnam’s textile and garment industry, Pham Huyen Trang, an analyst at Saigon Securities Inc., wrote in a note to investors September 8.
The Hanoi-based company, which accounts for 18 percent of Vietnam’s textile production, exported $2.9 billion worth of products in 2013, half of them to the US, its biggest market. The company wants to develop markets including Europe and Japan, it said in its IPO prospectus.
Vinatex’s exports rose 14.1 percent in the first eight months of 2014 from a year earlier. Vietnam had a trade surplus of $1.7 billion during the January-August period, compared with a $577 million deficit a year earlier, according to data compiled by Bloomberg.
The benchmark VN-Index rose 0.5 percent to 616.06 as of 12:22 p.m. local time day. The gauge has jumped 22 percent this year as a stable economy and widening trade surplus spurred foreign investors to boost holdings.