Investors keenly interested as State transport firms equitise

Friday, Jul 24, 2015 18:41

Vinamotor has become more attractive to investors after the Government allowed the transport ministry to withdraw all State capital from the corporation. - Photo

HA NOI (Biz Hub) — Many mergers and acquisitions (M&A) opportunities are likely to open up for both local and foreign investors when the transport ministry sells its stakes in many corporations during the rest of this year.

As soon as the Government gave approval for the ministry to pull out of the Vietnam Motor Industry Corporation Joint Stock Company (Vinamotor) late last year, at least four investors -- Sacom Investment and Development Joint Stock Company (Sacom), TMT Auto JSC, Vietnam N.A Motor Co. Ltd. (Vinamco), and Thanh Cong Ninh Binh Auto JSC -- expressed willingness to buy out its stakes.

The government's stakes in Vinamotor are estimated at around VND850 billion (US$38.9 million), equivalent to 97.9 per cent of its chartered capital.

The head of the ministry's Business Management Department, Vu Anh Minh, told Dau Tu newspaper that these four investors must have realised the profit-making potential of Vinamotor to be willing to sink such huge sums in it since its current operations are not attractive.

Prime Minister Nguyen Tan Dung has also given approval for the ministry to sell the entire Government stake in three transport construction companies, Civil Engineering Construction Corporation No 5 Joint Stock Company (Cienco 5), Cienco 6, and Cienco 8.

Like Vinamotor, the three corporations have become attractive to investors.

Earlier, the ministry sold its entire stakes in Cienco 1 and Cienco 4 and brought down its holding to below 36 per cent in some other companies.

The success of the ministry's equitisation process and divestment from many businesses in the past few years also owes to its willingness to allow investors a say in the management of businesses in industries not requiring State control, Minister of Transport Dinh La Thang told the newspaper.

He added that no big investor wantted to buy stakes in transport businesses without having any control over them.

Further development in production and business activities of many transport corporations because of allowing investors to run them after equitisation has also created a momentum for the ministry to decide to sell its stakes in other major corporations.

Cienco 1, for example, reported an increase of 145 per cent in after-tax profit in 2014, enabling the ministry to sell out.

Can Hong Lai, the general director of the company, said the presence of new members on the board of directors and a new remuneration method based on workers' productivity have helped improve functioning.

In the first half of this year the ministry sold its stakes in 19 companies for a total of nearly VND1.5 trillion ($69 million).

Its plans for equitisation and selling of stakes over the next six months have also been finalised. The ministry hopes to complete the equitisation of all companies the Government does not need to fully own, minister Thang told a meeting early this month to review the first-half performance.

It plans to sell stakes in 80 businesses, including Hai Phong Port, for more than VND7.17 trillion ($328 million).

After 2015 the ministry will only have control of four corporations and two companies: the Vietnam Railways, Vietnam Air Traffic Management Corporation, Northern Vietnam Maritime Safety Corporation, Southern Vietnam Maritime Safety Corporation, Vietnam Maritime Communication and Electronics LLC, and the Transport Publishing House.

Thang urged relevant agencies to carry out the divestment transparently and in a public manner in line with current regulations. Public auctions should be given first priority. — VNS

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