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Joint stock companies tend to seek support from state owned conglomerates
Joint stock companies all want to have “powerful shareholders” and tend to seek the shareholders among state owned conglomerates, which not only can provide financial support, but also can help create intangible value.
The share issuance of Vinaconex (VCG), PVX, both are the construction and installation companies, has succeeded with the efficient support from their big shareholders – big state owned economic groups or general corporations. The names of the big businesses serve as the guarantee for the shares’ value, thus attracting a lot of buyers.
PVX has said that the share issuance to increase its chartered capital has been completed with the support of the Vietnam National Oil and Gas Group PetroVietnam.
PVX offered to sell 125 million shares to its existing shareholders, but only 9609 shares were sold. 12.5 million shares were offered to sold to the company’s staff, but none of them intended to buy the shares. The 100 million shares offered to strategic shareholders were not sold. After the first share offer, 137,490,391 shares were left unsold.
As other shareholders refused to buy shares, PetroVietnam and some businesses which have relations with the oil and gas sector, decided to buy the shares in big quantities at 10,000 dong per share. PetroVietnam bought 110 million shares, Dai Duong Bank 4,091,391 shares, the Dong Thanh Import-Export and Construction Company bought 15 million shares, PVV – a material and investment company – bought 8.4 million shares.
After the share issuance, PVX got 1375 billion dong. If counting on the shares additionally issued to pay dividends for 2010, PVX’s chartered capital has increased from 2500 billion dong to 4000 billion dong. Now the state owned capital in PVX accounts for 53.25 percent, while foreign shareholders hold 18,028,356 shares, or 4.51 percent.
Even when PVX share price dropped to the level below the face value, and PVX faced the failure in the share issuance, Trinh Xuan Thanh, President of PVX still kept calm, saying that if the existing shareholders refused to buy the shares, PetroVietnam would buy them and continue giving support to PVX.
It is clear that PetroVietnam is a big name which can ensure the success in business plans of enterprises. Therefore, though PetroVietnam plans to lower its ownership ratio in PVX to 20 percent, PVX’s managers still want PetroVietnam to continue holding the controlling stakes.
The plan by PVX to let PetroVietnam to hold the control at the enterprise, in terms of high ranking personnel, brand and business plans, has been approved by the shareholders’ meeting. A lot of institutional shareholders, which are investment funds and well understand the conditions in Vietnam, approved the plan just after some thoughts.
Analysts also said that the share issuance of VCG would not have succeeded if the State Capital Investment Corporation (SCIC), a powerful unit of the Ministry of Finance, and Viettel, a military telecom giant, had not got involved in the case. Thanks to the two big names, VCG successfully distributed 141.71 millioni shares, or 70.86 percent of the total shares offered to sell.
SCIC now holds 57.79 percent of VCG’s shares, while Viettel 21.28 percent.
All businesses have realized the big role of the big state owned conglomerates. Some subsidiaries of Vinacomin, after a long period of operating independently, have decided to return to the parent group Vinacomin. V-Itasco, for example, has consulted with the shareholders on letting Vinacomin to hold the control over the company, though the group only holds 36 percent of the company’s stakes. Meanwhile, the companies of the HUD family have also insisted on the group’s control.
Anh Viet
vietnamnet
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