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Is it advisable to delay SOEs’ IPOs?
Many investors believe that the state should delay the IPOs of state owned enterprises in order to help recover the stock market. However, experts have pointed out that this is not a good solution.
The massive issuances of shares at the beginning of 2007 were considered the main reason that made the stock market fall. Meanwhile, the State is planning to IPOs a lot of its big corporations in 2008, namely Habeco, Incombank, BIDV, MobiFone and VinaPhone.
The Government has set up the goal of equitising 1,500 enterprises from 2006 to 2010. However, only 82 enterprises were equitised in 2007, fulfilling 21% of the set plan.
Investors want the state to delay IPOs, because the delay will help make the share supplies limited and share prices stay firmly high. However, as for enterprises, delaying IPOs means slowing down the enterprises’ development.
Dr Tran Du Lich, Head of the HCM City Economics Institute, said that besides capital, IPOs can also bring new way of management and technologies which are very useful for enterprises.
Dominic Scriven, General Director of Dragon Capital, cited Vinamilk IPO as an example. In 2003, Vinamilk’s was valuated at $100mil. In 2004, when it was equitised, Vinamilk’s was valuated at $150mil. Meanwhile, the state owned capital and interests in Vinamilk has soared $970mil now.
He said that it is wrong to conclude that the IPOs of Bao Viet, Vietcombank, PV Insurance or Phu My Fertiliser were premature because the enterprises’ shares could not be sold at high prices.
Dr of Economics Nguyen Quang Hung shared the same view, saying that the share prices of the said enterprises were really lower than the prices seen in the hottest period of the market. However, the price levels prove to be acceptable, as they reflect the true value of the enterprises.
According to Tran Ngoc Nam, a securities analyst, people think that enterprises must sell their shares at the prices 5-10 times higher than the face value, and it is really a blunder, because the viewpoint may distort the vision about equitisation and IPO.
Nam said that investors will not turn their backs to enterprises’ shares if the share prices truly reflect the real value of the enterprises. Other experts have also rejected the viewpoint that the idle capital among the public is nearly exhausted and investors cannot arrange capital for other IPOs.
In a recent talk with local press, George Mathewson, Chairmann of Toscafund, which is managing the asset worth $10bil, said that the fund is very interested in the IPOs of state owned banks, and the share issuance of other commercial banks.
The director of another foreign investment fund also said that he expects other IPOs of big corporations, as he hopes to successfully buy the shares of the attractive companies, while there is no more room for foreigners in listed companies.
If the State indulges investors and decides to delay the IPOs of big corporations, this would harm the equitisation process. Meanwhile, experts came to the conclusion at the recent workshop on SOE equitisation that the tardiness in the equitisation process with bring big disadvantages to Vietnam in the integration into the world.
As previously planned, Vietnam will have to IPO 20 big corporations, nearly 400 enterprises and several big banks.
VNN
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