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Vietinbank’s shares won’t be unmarketable: Chairman
Those, who like recalling the ‘golden age’ of state-owned enterprises’ IPOs, cannot imagine that the starting price for Vietinbank’s IPO, slated for December 25, is only VND 20,000/share.
Pham Huy Hung, Chairman of Vietinbank, talks about the IPO plan of the bank.
Could you please give us some information about Vietinbank’s IPO to be held on December 25?
Vietinbank has prepared for the event over the last four years. We invited famous consultancy organizations to join the progress. JP Morgan Securities has been in charge of financial consultancy, equitisation, and corporate valuation, while Ernst & Young Vietnam has been in charge of the auditing consultancy, YKVN has been providing legal consultancy, and SSI Securities Company has been in charge of giving advice on domestic auctions.
Vietinbank’s current chartered capital is VND 13,400 billion, of which 4%, or 53,600,000 shares, will be put on sale at the IPO.
Foreign investors will be allowed to purchase a maximum of 16,080,000 shares (30% of total shares on sale). The face value of the shares is VND 10,000/share, while the starting price for IPO is VND 20,000/share.
Why has Vietinbank decided that the starting price would be VND 20,000/share?
The price has been set based on the consultancy of JP Morgan Securities, the State Bank of Vietnam, the Ministry of Finance, and the Government of Vietnam.
I think that the starting price level is suitable to the current condition. I do not think that this will be the final price level, as the final price level must be defined by the market when Vietnam makes IPO on December 25, 2008.
Assuming that the average IPO price is VND 20,000/share, Vietinbank will receive a capital surplus of over VND 1 trillion. How will the sum of capital be used?
Under the Decree No 109, the state has the right to use the surplus capital attained from IPOs, and the sum of money must be transferred to the State Capital Investment Corporation (SCIC). However, we think that it would be better to set up a state investment fund at Vietinbank, which will be disbursed for key Government projects.
What will happen if the IPO does not succeed as expected?
This will not happen for several reasons:
First, Vietinbank’s staff is ready to purchase Vietinbank’s shares.
Second, Vietinbank’s shares prove to be a good commodity. Vietinbank currently has one headquarter, three transaction exchanges, 140 branches, 1800 transaction offices, 258 transaction points, 191 saving banks, 742 ATMs, two representative offices and three subsidiaries, including a finance leasing company, securities company, and asset and management company.
Vietinbank’s chartered capital by December 31, 2007 had reached VND 7,608 billion, and the total assets VND 166,112 billion, or 10% of total assets of the whole banking system.
The non-performing loan (NPL) of Vietinbank, which has been at 1.41% as of December 31, 2006, had decreased to 1.02% by December 31, 2007, which showed the considerable improvement of the NPL management.
How about Vietinbank’s foreign strategic shareholders?
A lot of foreign investors have expressed their willingness to become our strategic partners. We have chosen seven big investors from the US and Europe. After selling 4% of shares to the public, we will hold an auction for foreign strategic shareholders.
TBKTVN
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