Enterprises in race to raise funds through share issuances
As access to credit is not easy or has reached its limit, while bonds have not performed well either, businesses have to shift towards raising capital in the stock market.
Despite the volatile trend on the stock market, a number of listed enterprises still announced plans to issue millions of shares to raise capital.
According to many financial experts, businesses increasing capital mobilisation through stock issuance is a reasonable solution, easing the burden on credit capital and the bond channel, which have not really improved.
Last week, SSI Securities Corporation announced that the company's shareholders had approved the plan to issue a total of more than 453.3 million new shares to increase capital.
In particular, the securities firm will issue 302.22 million bonus shares at a ratio of 100:20 to existing shareholders, meaning 100 shares will receive 20 new shares.
SSI also issues more than 151 million shares for existing shareholders at a price of VNĐ15,000 a share (US$0.62 a share). The ratio of exercising rights is 100:10, which means shareholders owning 100 shares have the right to buy 10 new shares.
It expects to earn nearly VNĐ5.3 trillion from this share issuance to supplement capital for margin trading loans and investment in bonds, certificates of deposit and other valuable papers.
SSI's charter capital is also expected to increase from more than VNĐ15.1 trillion to nearly VNĐ19.65 trillion.
Many other securities companies have also announced plans to issue shares to increase capital in the last days of 2023 and early 2024.
For example, the Hồ Chí Minh Securities Corporation plans to release more than 297 million additional shares to increase charter capital from VNĐ4.58 trillion to more than VNĐ7.5 trillion.
VNDirect Securities Corporation also plans to offer nearly 244 million shares to existing shareholders at a ratio of 5:1, with an offering price of VNĐ10,000 per share.
VNDirect intends to pay stock dividends to shareholders at a rate of 5 per cent, equivalent to issuing nearly 61 million new shares.
HD Securities Corporation is also implementing a plan to offer more than 67.5 million shares to existing shareholders at a price of VNĐ15,000 a share, bringing its charter capital to nearly VNĐ1.7 trillion. This helps the company improve its financial potential and raise capital size to supplement business activities.
Not only in the securities industry, but many real estate companies issue a large number of shares to raise capital in the face of difficult-to-access bank credit channels.
Novaland has asked for shareholders' opinions to approve the plan to issue 200 million individual shares with a par value of not less than VNĐ10,000 a share.
The property developer also plans to offer a maximum of more than 1.17 billion shares to existing shareholders at a ratio of 10:6, meaning that shareholders owning 10 shares will have the right to buy 6 new shares with price not lower than VNĐ10,000 per share.
The earnings from these offerings will be used for purposes such as investing and contributing additional capital to subsidiaries to restructure debt and pay off obligations.
Similarly, Đất Xanh Group has just announced a public offering of more than 101 million shares to existing shareholders. With the offering price of VNĐ12,000 per share, the entire amount of mobilised capital is VNĐ1.22 trillion and is expected to be used to contribute capital to Hà An Real Estate Investment and Business JSC and pay its issuing expenses.
Other real estate businesses, such as Hoà Bình Construction Group and Hưng Thịnh Corporation, also intend to raise capital through share issuances. Meanwhile, Hoàng Anh Gia Lai JSC approved a plan to offer 130 million shares to three strategic investors to mobilise VNĐ1.3 trillion to repay loans.
The price of Hoàng Anh Gia Lai’s shares on the exchange has increased rapidly after the announcement, as investors believe that the additional issuance will have a positive impact on the company’s business activities while alternative mobilisation channels are difficult to access.
Ease burden
According to many experts, raising capital through issuing shares amid the current unstable stock market is not easy. However, this is a more feasible capital mobilisation option as other channels, such as bonds, are still difficult. Corporate bond maturities are under significant strain, and bank credit channels are difficult to obtain.
Previously, besides borrowing from commercial banks, some real estate businesses mobilise capital through the channel of issuing large bonds, Nguyễn Hữu Huân, HCM City University of Economics, told Người Lao động (The Labourer) newspaper.
However, businesses that can access bank capital all have outstanding loans or no longer have collateral to borrow, forcing them to find other capital mobilisation plans.
Meanwhile, fundraising through corporate bond issuance has not improved recently.
”Although the stock market has not yet attracted cash flow from investors, especially with the pressure of net selling from foreign investors, issuing bonds to mobilise capital is the most feasible option now,” Huân said.
Economic expert Đinh Thế Hiển said that the demand for credit capital of many businesses is very high, but on the contrary, the pressure on bonds due at the end of the year and the 2024-2025 period is not small.
This forces businesses to source capital from many different sources, not just bank credit. Therefore, mobilising capital from the stock channel is also a way to ease the burden on bank credit and the bond channel. — VNS
