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Learning to speed-up equitisation
The State Securities Commission and Ministry of Finance are working together to create a new share offering method for State-owned firms during initial public offerings (IPO).
The effort aims to make local IPOs more successful.
Accordingly, firms may be allowed to sell stakes to strategic partners either before or after the IPO, and the stake’s price in these sales is not dependant on the average winning price usually generated through an IPO.
At present, a firm must conduct an IPO through auctioning, underwriting and negotiations. However, the share price, set through underwriting and negotiations, must follow the average winning price. Thus, offerings can occur only after an IPO.
According to the Ministry of Finance, present IPO regulations have not helped local firms acquire suitable strategic partners, who can help them with administrative governance after equitisation.
The equitisation process has therefore been slower than originally planned.
“Almost all equitised State-owned firms are small and medium-sized enterprises. Meanwhile, large-scale firms are moving quite slowly through this process,” said the ministry.
“Vietcombank is a typical example. This giant bank has not yet chosen any foreign strategic partners although its IPO occurred nearly a year ago,” said independent analyst Nguyen Tien Dung.
Dung also said that the support from strategic partners partially contributed to the promotion of administrative governance of an equitised firm, so strategic partners played an important role in equitisation.
“In spite of how well a firm might perform, the share price must be reasonable for both the seller and buyer to reach consensus. The reasonable price is reached through discussion not based on any winning price,” Dung added.
A total of 3,786 enterprises in the country have completed the equitisation process, according to Ministry of Finance data. In the 2008-10 period, the ministry will continue equitising 948 State-owned firms.
VNA
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