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SSC proposes to delay SOEs’ capital withdrawal plans
The State Securities Commission (SSC) and the National Finance Supervision Council have proposed to delay the plans by state owned enterprises (SOEs) to withdraw capital from enterprises, stressing that this is a necessary move to restrict the securities supply to the stock market which remains lackluster.
After winning the bid to provide consultancy service on the restructuring investment portfolio of the Vietnam Post and Telecommunication Group (VNPT) in enterprises, FPT Securities Company is waiting to get the list of the enterprises before carrying out necessary valuation steps.
VNPT’s managers said that the group is following a plan to withdraw capital from enterprises as per request by the government. The government has found that state owned economic groups have injected too much money on non-core business fields, which may bring high risks to the groups and the state’s capital.
The Ministry of Finance is drafting a legal document which stipulates that economic groups and general corporations have to reduce the non-core investments proportions from 30 percent to 15 percent of the stockholder equity.
Therefore, VNPT has decided a consultant for its capital restructuring plan, under which it will transfer some financial investments. At present, VNPT has capital contribution at SPT, Maritime Bank, Nhon Trach 2 thermopower plant, and it is holding shares of subsidiaries including SAM, POT, TST, VTC and PTI.
The first thing that VNPT would do is to sell the options for purchasing shares to be additionally issued by Maritime Bank. After that, investors have predicted, VNPT would withdraw capital from the enterprises listing on the bourses.
The Vietnam National Oil and Gas Group (PetroVietnam) has also been forced to withdraw from some investments. The group is drafting a financial mechanism for the Dung Quat Oil Refinery which will be submitted to the management agencies. The financial mechanism would serve as the basis for calling for further investments in the next phases of the work.
Meanwhile, PetroVietnam is also awaiting suitable opportunities to sell the shares of 23 subsidiaries which are listed on the bourses. Especially, PetroVietnam Construction and Installation Company, a subsidiary of PetroVietnam, has announced the sale of stakes even when the value of the investment has dropped to the level just equal to ½ of the cost price.
The Vietnam Construction and Import-Export Corporation (Vinaconex) has also announced that it is seeking the partners who buy millions of shares of Vinaconex’s subsidiaries.
A manager of the corporation has revealed that the corporation has to sell stakes now to get capital for investment. Vinaconex’s board of directors decided to sell stakes at Vicostone last year. However, as the stock market has been too gloomy, the sale plan has not fully completed. Though the market has become worse, Vinaconex still has to sell stakes now.
Big institutional investors in Vietnam, like Vietcombank, the Vietnam Coal and Mineral Industries Group (Vinacoal) are also trying to cut down their investment portfolios. Also, equitized SOEs are also selling shares in masses, leading to the oversupply, which experts believe, will make the stock market more lackluster.
A director of a securities company has revealed that the auctions of state’s capital over the last year only could attract the participation of domestic investors, while foreign investors stayed away from auctions.
Only a share auction of a general corporation recently was considered as “successful”, though it could not sell all the stakes. However, opinions from well informed circle said that a bank with the “state origin” spent 250 billion dong to purchase the corporation’s shares.
It is obvious that it is very difficult to withdraw investments at this moment, especially when the demand from foreign investors is very weak. A lot of investment funds have been taking loss in Vietnam, while they complained that they find it difficult to access information sources.
vietnamnews
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