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Vietcombank releases details on upcoming IPO
The Bank for Foreign Trade of Viet Nam (Vietcombank) will auction a 35 per cent stake during its initial public offering tentatively set for next month on the HCM City stock exchange, according to a statement released on the company’s website late Thursday.
The plan was approved by the Prime Minister’s office a day earlier.
Twenty per cent will be allocated to one or two foreign strategic investors and 5 per cent to domestic strategic investors. Another 6.5 per cent will be sold to the public with another 3.5 going to bank employees.
The State will maintain at least a 65 per cent stake in the country’s leading financial institute after the IPO, which will be reduced to 51 per cent during Vietcombank’s second equitisation phase.
In the second phase, the bank plans to issue a 15 per cent stake on an overseas bourse.
Criteria for potential foreign strategic investors were also released on Thursday.
Foreign strategic investors must be in good financial standing, not have any conflicts of interest in teaming up with Vietcombank and show intent to help in the bank’s development.
Foreign and domestic strategic investors must also agree to hold Vietcombank shares for at least five years. The bank has yet to release names of potential partners, though there is plenty speculation on the stock market.
Vietcombank was ordered by the PM’s office to submit a list of potential strategic investors and a proposed initial price for shares next month.
Bank executives could not be contacted yesterday for comment.
Vietcombank’s equitisation has drawn much local and international attention, with several financial institutions in the US, EU and across Asia indicating interest in the share offering.
"After the equitisation, Vietcombank will operate in accordance with international standards and business practices. I do not believe it will be a case of ‘old wine in a new bottle’ like other companies," Le Xuan Nghia, director of strategic development at the State Bank of Viet Nam.
"Old wine in a new bottle" refers to companies that issue shares but do not manage to improve their business practices or financial performance.
When asked if the stake allocated for the public was adequate, Nghia said, "If people think the 6.5 per is too small, they should look at the bank’s charter capital of nearly a billion US dollars, in which case the 6.5 per cent is significant."
Nghia said Vietcombank has the potential to lift the market given investor interest in the company and potential earnings. He said there was little reason to be sceptical over the bank’s ability to raise capital during its IPO.
Though with October just around the corner, there is concern if the bank, which has already selected Credit Suisse as its financial advisor, will be able to hold the share offering in time. The IPO has already been postponed twice.
"I cannot predict the performance of Vietcombank shares when they debut. However, even though the PM has approved the equitisation, I cannot assume Vietcombank will offer their shares in October," said Nguyen Son, vice director of market development at the State Securities Commission.
Previous delays were spurred in large part to concerns over the bank’s ability to raise capital during the stock exchange’s seasonal downtrend. In recent weeks though, the market has rebounded.
Vietcombank held VND171.86 trillion (US$10.74 billion) in capital at the end of 2006, up 23 per cent year-on-year, and handled $23 billion in transactions, accounting for 27 per cent of the domestic banking market.
VNS
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