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Market regulator says it will control IPO prices to life market
Vietnam will control the pricing of initial public offerings (IPO) and make companies commit to a listing time to revive share sales, said chairman of the State Securities Commission Vu Bang.
Investors including Vietnam Opportunity Fund Ltd. and PXP Vietnam Asset Management Ltd. Have said state-owned company IPO prices have been too high and have damaged investor sentiment.
The government policy of selling shares in state-owned enterprises as part of a two-decade-old shift to a market-based economy has lost pace as the benchmark VN-Index declined 43 percent this year.
IPOs dropped by a quarter in the first seven months of the year from the same period in 2007, Bang said in an interview on Monday.
“We will more strictly control the process of price valuation, choosing consultants and strategic investors, and transparency of information disclosure,” he said.
Joint-Stock Commercial Bank for Foreign Trade of Vietnam, known as Vietcombank, the first state-owned bank to sell shares, has yet to list its stocks, nine months after a US$656 million IPO.
Shares of Vietnam Construction & Import-Export Joint Stock Co. first traded on an exchange September 5, almost two years after it sold shares.
The Hanoi-based securities commission, which regulates Vietnam’s $14.7 billion market, will force companies “to make a commitment on the time of listing,” said Bang, 51.
Regulators currently have no limit on how long a company has to wait before its shares start trading.
Inflated prices
The government sold Vietcombank shares in December at a minimum of VND100,000 ($6) a share, with an average accepted price of VND107,860.
The state sold only 61 percent of the 128.3 million shares available in Saigon Beer-Alcohol-Beverages Corp. in January with an average winning bid of VND70,003, compared with a minimum of VND70,000.
The sale was “largely considered a failure,” according to a report by DWS Vietnam Fund Ltd.
“They need to get the pricing right,” said Kevin Snowball, Ho Chi Minh City-based chief executive officer of PXP Vietnam Asset Management, which manages $300 million in Vietnamese equities, including Vietcombank.
“You’ve got to encourage people to think that they can make some money out of this.”
Vietcombank, the third-largest bank by assets, has delayed its listing at least twice.
The bank hasn’t met the requirement of selling 20 percent of equity needed to list on the Ho Chi Minh Stock Exchange, Vietnam’s biggest exchange, Bang said.
Delayed listings
Only 9 percent of Vietcombank has been made public, Chairman Nguyen Hoa Binh said Monday.
The Hanoi-based lender can first trade on the so-called over-the-counter market, which the securities commission plans to regulate “to reduce risk for investors,” Bang said.
“Companies that want to list on the regulated OTC market must be audited and have to publish their financial information,” he said.
The government is behind in its process of “equitization,” the official term for sales of stakes in state-owned companies, “mainly because of the slump of the stock market,” Bang said.
“Many companies have failed to issue additional shares to raise capital,” he said.
Slowing growth
Vietnam’s central bank this year raised interest rates to the highest in Asia to slow inflation from 28.3 percent, the fastest in the region.
The government cut its target for economic expansion for the year to 7 percent from 9 percent.
Vietnam widened the daily trading limit and twice cut fuel prices last month to shore up stocks.
The VNIndex has rallied 46 percent from a 28-month low in June.
The measure closed at 525.49 points Tuesday.
“The rebound of the market recently is a favorable time for the Vietnamese government to speed up the equitization process,” Bang said.
Bank for Investment & Development of Vietnam, the second-biggest lender by assets, and Vietnam Mobile Telecommunication Service Co., known as MobiFone, are preparing to sell shares.
France Telecom SA, Europe’s third-largest telephone company, and Vodafone Group Plc are considering buying stakes in MobiFone, which last month hired Credit Suisse Group to advice on the sale.
Thanhnien
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