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Equitisation process slows on failed IPOs
Equitisation of State-owned enterprises is falling far short of targets this year.
Only 28 percent, or about 73 out of the 262 State-owned enterprises slated for privatisation this year had completed the process as of the end of November, according to the latest Ministry of Finance’s report.
This volatility of the market due to the economic crisis is cited as a key reason for the slowdown.
As a result, initial public offerings (IPOs) from State-owned companies have been less effective than expected, which has caused reticence in other firms to do the same.
According to securities experts, the evaluation of enterprises is another big hurdle for an effective equitisation process. The firms are often being evaluated at levels higher than their true value, thus decreasing investor confidence and making the IPOs less attractive to investors.
Analyst Ha Trung Hieu of An Binh Securities said that investors were now carefully scrutinising the offering price for each IPO, because of too many losses in their securities investments recently.
“At present, investors are quite experienced with the volatile market. They can recognise good stocks to invest in. A reasonable price [not at a low level] will be decisive for a good firm to go public successfully,” Hieu added.
The ministry said the country would have 948 enterprises undergo the privatisation process in the 2008-10 period, despite the slowing of the process this year.
vna
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