The State Securities Commission (SSC) will enhance the quality of securities firms by shutting down and revoking licences of financially-weak companies to ensure the sector is healthy.
According to SSC Vice Chairman Pham Hong Son, the SSC will have solutions to improve the quality of products and services of securities firms, clean the equity market and provide the best products and services for investors.
The securities sector has been shaken up since 2012, curbing the number of securities firms to 77 from 104, including eight business shutdowns, eight mergers and one acquisition deal between Sai Gon-Ha Noi Securities JSC (SHS) and Sai Gon-Ha Noi Bank Securities JSC (SHBS).
“Securities firms are encouraged to carry out M&A deals to improve their own competency. The SSC will consider revoking licences of those that are not financially capable and don’t meet its requirements,” he said.
“Big or small companies have their own advantages, so the real matter is to ensure they are financially capable so that their supply for customers is sufficient.”
Though the takeover of SHS for SHBS is the first acquisition deal among Vietnamese securities firms and the deal was approved in August 2018, SSC had prepared its legal framework for the deal, Son added.
“The acquisition will help the takeover company increase its capital capability and improve its position in the market.”
“The SSC has received some filing for M&A deals among securities firms and the market regulator is reviewing the feasibility of those files.”
SHS General Director Vu Duc Tien said acquisition is the best solution for securities to increase capital and competitiveness in the market compared to others such as charter capital raise and merger.
“Charter capital hike literally means increasing one company’s financial status and working capital while merger is applied for two firms or more that are not strong enough and aim to form an alliance to improve their competency,” Tien said.
Acquisition means one securities firm can increase its charter capital and total assets, take advantage of the targeted firm’s client network and improve its status on the market. This is a comprehensive solution for all businesses, according to Tien.
However, this method requires each securities firm to understand its scope, market position and the targeted company, he said.
“The most difficult task is how to target the right company and convince the subject to be acquired. The acquisition of SHS for SHBS is the first deal in Viet Nam, so there are lots of issues that still need sorting out.”
On August 29, the SSC officially approved SHS’s acquisition of SHBS, completing Viet Nam’s first acquisition deal between a listed securities firm and an unlisted one.
SHS shares, listed on the Ha Noi Stock Exchange with ticket SHS, fell nearly 1.3 per cent to close August 29 at VND15,400 (US$0.68) per share.
After the deal was completed, the charter capital of SHS increased to VND1.05 trillion ($46.8 million) from VND1 trillion.
SHS issued nearly 5.4 million shares for SHBS shareholders in a share swap deal to convert 15 million shares of SHBS with a ratio of 1:2.78.
The entire 5.4 million shares were restricted from trading within a year from when the SSC approved the share swap deal, which was March 23, 2018.
SHS rose by 1.8 per cent to finish yesterday at VND16,600 per share. — VNS