Government to sell Vinamilk stake this year

Thursday, Sep 15, 2016 11:20

The Government will divest its stake in Vinamilk this year. - Photo VNA/VNS
HA NOI (Biz Hub) — The Government will divest its stake in Vietnam Dairy Products JSC (Vinamilk) this year, a senior official from the Ministry of Finance told a press briefing on September 14.

Deputy Director of the Finance Ministry's Department of Corporate Finance Dang Quyet Tien said besides Vinamilk, the Government will also sell its stake in nine other leading state-owned enterprises (SOEs) early next year as part of the country's new economic strategy.

Tien did not reveal details about the Vinamilk divestment, saying that the sovereignty wealth fund State Capital Investment Corporation (SCIC) is preparing the plans to be submitted to the Ministry of Finance and the Prime Minister soon.

He, however, said the divestment process must be executed carefully to avoid any negative impact on the stock market as investors might focus entirely on Vinamilk. The State ownership in Vinamilk is huge, valued at nearly VND100 trillion (US$4.46 billion), he said.

The Government may choose to sell the stake gradually, in portions that can be easily absorbed by the market, he said, assuring that the sale will be in accordance with the country's legal regulations and transparent to ensure interests of the State and the investors.

The Government currently holds 45.1 per cent stake in Vinamilk. At present, Vinamilk's largest foreign shareholder is F&N Dairy Investment, part of the Fraser and Neave conglomerate, with 11 per cent. The firm is controlled by Thai beer tycoon Charoen Sirivadhanabhakdi, who has been making inroads into Viet Nam via his Thai Charoen Corp.

Vinamilk is one of the country's most sought-after equities and foreign investors have long been interested in Vinamilk thanks to its strong prospects and expansion plans. Vinamilk's shares have increased 18 times since the company was first listed in 2006 to VND146,000 per share as of mid-May.

In late June, the board of directors of Vinamilk formally approved the removal of its 49 per cent foreign ownership cap, paving the way for an expected surge of interest from overseas investors in the local company.

Late last year, SCIC unveiled plans to sell the state's holding in 10 leading SOEs, which could earn it a total of $3 billion.

The enterprises are Vinamilk, Bao Minh Insurance Corp, Vietnam National Reinsurance Corporation and Tien Phong Plastic JSC, as well as Binh Minh Plastic JSC, Vietnam Property and Infrastructure JSC, FPT Corp and FPT Telecom, along with Ha Giang Mineral Mechanics JSC and Sa Giang Import Export Co.

SOE equitisation

During the press briefing, Tien said that the Government has instructed the State Securities Commission to impose stricter penalties on SOEs that have been equitised but have delayed to list on the stock market.

Tien said the Government is also scrutinising SOEs which haven't been equitised, even though their equitisation plans have been approved by the Government. He admitted that the equitisation process of SOEs had not met expectations in the first eight months of 2016.

During January-August, SOEs and the State Capital Investment Corporation divested more than VND2.9 trillion ($129.46 million) and brought in over VND5.7 trillion in the process.

Tien attributed the slowdown to restricted investment capital flow in wake of the global and domestic economic difficulties.

In a move aimed at boosting the equitisation the next time, Tien said, the divestment of State capital at SOEs will be implemented through public auctions with no discrimination between domestic and foreign investors.

He said the Government will also hire consultant firms to avoid loss of State capital as some potential factors of value, such as trademark, were not included in the enterprises' financial reports. — VNS

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