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New tentative regulation puts businesses into dilemma
A lot of economic groups and general corporations are trying to sell stakes in order to reduce the investments in non-core business fields, because they know that they will have to do this, sooner or later.
The Ministry of Finance is drafting the decree on the capital use and finance management at state owned enterprises (SOEs), which says that the investments in non-core fields must not be higher than 15 percent of the total investment capital instead of the current applied level of 30 percent.
Though the decree has not been signed by the Prime Minister, economic groups and general corporations now rush to sell stakes out in anticipation of the new regulation on the limited investment proportions.
On August 18, more than 5.2 million of options to buy the shares to be additionally issued by the Vietnam Paper Corporation (Vinapaco) at SGM in a plan to raise SGM’s chartered capital from 16 billion dong to 320 billion dong, will be put into auction at the starting price of 7500 dong per option (An option allows shareholders to purchase one new share at the face value of 10,000 dong).
Though believing that SGM has great development potentials, VInapaco does not intend to continue injecting money in the company. The representative of Vinapaco said that the corporation now needs capital to gather strength on its key production field and restructure its investment portfolios at the businesses, where the corporation does not need to hold stakes, therefore, Vinapaco has decided to reduce the share ownership ratio at SGM.
Since SGM is believed to be a good business, the high price of the option, at 7500 dong per option, is believed to succeed.
Meanwhile, the starting price that the Vietnam National Post and Telecommunication (VNPT) group has set for the share issuance to increase the chartered capital of the Maritime Bank at just 100 dong per option. Analysts say that with the high volume of options in the context of the low bank share prices, they cannot see many factors which can ensure the success of the auction.
According to the Vietnam Coal and Mineral Industries Group (Vinacomin), the divisions of the group have proposed to withdraw all the contributed capital or parts of the capital from some enterprises which Vinacomin invested in 2011-2012.
As such, Vinacomin may withdraw capital from the Ha Tinh Port Company, where it contributed 36 percent of capital, the Hai Ha Economic Development Zone (10 percent), the Dak Nong Wolfram (29 percent), BIDV Expressway Development Compamy (7 percent), the Long Thanh International Airport (8 percent) and the aviation insurance company (10 percent), the Vietnam Investment Fund (5 percent).
Vinacomin is also considering withdrawing the contributed capital at the Thach Khe Iron Mine Company, if the economic group cannot hold the controlling stakes of 51 percent at the mining company (now it holds 30 percent).
Vinacomin has also been asked to restructure the investment portfolio at some other businesses, including the Saigon-Hanoi Bank (SHB), SHS Securities Company, SHB-VInacomin Insurance Company. However, the final decision will only be made by the board of members of VInacomin.
The Vietnam Rubber Group VRG, is now holding stakes at the Rubber Securities Company and SHS Securities Company. According to Le Quang Thung, Acting Chair of VRG’s Board of Members said the total non-core investments of the group is now below 20 percent of the total investments.
Also according to Thung, the investment in SHB Bank was approved by the Prime Minister. Since VRG considers the investment in SHB bank a long term investment deal, the decreases in bank share prices do not affect VRG’s investment decision. Now VRG is holding 15 percent of the total capital at SHB.
Meanwhile, VRG’s capital proportion at the Rubber Securities Company has decreased to several billion dong after VRG has transferred shares to other investors.
“The investment in the bank is a long term investment, while the capital contributions to other companies still can bring fat profits. I can say for sure that the non-core investments of VRGi have been safe,” Thung said.
The request by the State to reduce non-core investment proportions and the gloomy stock market has put corporations into dilemma. If they sell shares now, they would incur loss when the share prices have plunged dramatically. If not, they would not be able to obey the instruction by the State
vietnamnet
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