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Seeking foreign partners: the new tendency of securities companies
In the last month, M&A (merger and acquisition) brokerage companies have received a lot of orders from securities companies to help them find suitable foreign partners.
At a recent workshop on M&A, among the participants were Nguyen Manh Hao, General Director of APEC Securities Company, and many other securities companies’ leaders. Hao had to wait until the workshop finished to meet Adrian Bradbury, Director, head of the finance consultancy division under the financial group Quam.
The two directors exchanged information about the two sides, which they hoped would lay the foundation for further cooperation. Mr Bradbury said that the Hong Kong financial institution wanted to push up investment in Vietnam through purchasing stakes of Vietnamese companies.
As Quam has a wide network in Japan, China, Hong Kong, Dubai and Thailand, Vietnamese securities companies cooperating with the group would have opportunities to get more clients, including foreign ones, while they now have domestic clients only.
Vietnamese securities companies not only need financial support from foreign partners, but also support to improve corporate governance skill and technology, especially to expand markets.
A lot of securities companies have been established recently and many of them have gained satisfactory success. However, experts have pointed out that companies have not focused on the core business field, while their main source of income has come from share trading activities.
These companies have the functions of providing consultancy services and guaranteeing for enterprises’ securities issuances. However, the number of these contracts remains very modest. Some securities companies even have to offer consultancy services for free to lure clients.
Tiger Invest, an M&A company, has received proposals from six securities companies to help them find foreign partners. Among the six, three express willingness to sell 49% (the highest allowed level) of stakes to foreign partners, while others say they want to sell 30% of stakes.
According to Pham Xuan Can, Director of Tiger Invest, foreign investors are really interested in Vietnamese securities companies.
Can said that if foreign investors buy stakes of Vietnamese securities companies at this moment, they can obtain big volumes of stakes at very attractive prices (some deals have been inked with the purchase prices equal to the face value of stakes).
In fact, Vietnam’s Securities Law will allow foreign investors to establish 100% foreign owned securities companies in the future. However, they will have to follow complicated administrative procedures to get licences. Even after getting licences, foreign investors will have to spend some more time to penetrate the market. Meanwhile, if purchasing existing companies, foreign investors will not have to waste time on procedures and the steps to learn about the market.
Nguyen Quoc Toan, Director of a company, also specialising in M&A services in HCM City, said that his company has accepted providing consultancy services to six companies seeking foreign partners. The companies include ones which have the chartered capital of several hundreds of billion VND and suffer no financial difficulties. They simply want to improve corporate governance skills, modernise technologies to launch new services in Vietnam.
Sources from the State Securities Commission (SSC) say that seven securities companies have got approval from the SSC to sell stakes to foreign partners with very simple procedures. SSC applauds the plans by Vietnamese companies to seek foreign partners to improve their competitiveness.
SSC also supports the idea of merging domestic securities companies to form bigger and stronger companies. However, an official from SSC said that no application of this kind has been made to SSC so far, adding that this kind will only appear in two years, when there appear strong companies, which are capable enough to swallow other companies.
Also according to SSC, there has been no new application for setting up a securities company submitted for 2-3 months, which shows that running securities companies is really not an easy business at all. REE has decided to give up its plan to set up a securities company though its application was approved in principle.
VNN
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