Workers process tea leaves at Vinatea Corp. The company makes an initial public offering today. — Photo vietstock.vn

HCM CITY (Biz Hub) — State-owned agribusinesses are going down the equitisation path, with several already completing their initial public offerings or close to doing so.

Vietnam National Tea Corporation (Vinatea) will make an IPO of almost 11.8 million shares today at the Hanoi Stock Exchange at a reference price of VND10,000 (US$0.44).

Nine parties, including an institutional investor, have registered to buy slightly more than the total number of shares on offer, according to HSX.

Another 1.6 million shares have been earmarked for employees and nearly 23.6 million will be sold to strategic shareholders.

After the equitisation, the company's chartered capital will be worth VND370 billion ($16.3 billion).

Earlier this month the Vietnam National Vegetable, Fruit and Agricultural Product Corporation (Vegetexco) sold 27.67 million shares to the public, raising more than VND278 billion.

Vegetexco will sell 60 per cent to strategic investors.

The Ministry of Agriculture and Rural Development (MARD) has so far turned 10 of its corporations into joint stock companies.

Valuation of the Vietnam Forest Corporation and Vietnam General Corporation of Agricultural Materials is underway, and their equitisation plans are expected to get approval next quarter.

The remaining three corporations earmarked for equitisation by the ministry will complete the process next year.

According to Deputy Minister of Agriculture and Rural Development Ha Cong Tuan, equitisation of farming and forestry businesses face various difficulties, and any solution that does not safeguard the interests of land-owning households, the Government and the businesses would result in complaints and even law suits.

Another obstacle was that the agricultural sector did not make high profits, he said.

But one encouraging sign was that large corporations like Vinamilk, TH Milk and Vingroup were showing interest in the sector, he said.

Businesses want to acquire entire companies that are equitised with one condition – the companies should possess large areas of land for them to make major investments and deploy new technologies.

Thai Huong, chairwoman of dairy firm TH Corporation, said there were large areas of idle farmlands but they were fractured into tiny lots, and acquiring them one by one would take time and involve tortuous procedures, which put potential investors off.

MARD has established a working group to attract investment in the agricultural sector, with the participation of tens of major companies.

One of the group's targets is to work with local authorities on large land funds on which investors could develop large projects, and this is expected to help speed up equitisation of companies in the farm sector. — VNS