StoxPlus’s Preliminary Research Report on Vietnamese SOE IPOs
• The privatization of State-owned enterprises (“SOE”) which is normally referred in local news headlines as equitisation in Vietnam has recently becoming a hot topic than ever in Vietnam following the resume of the Government’s plan with aggressive and specific measures and targets. The SOE equitisation program started from 1992 with over 4 thousand of SOEs equitised. The program got peak in period 2003-2006 together with the booming of the stock market in Vietnam.
• Currently, there are 573 wholly SOEs yet to be privatized. However, at the same time, the Government has introduced a very aggressive restructuring program by reviewing and approving specific restructuring proposal for each of 10 State Economic Groups and 11 State Corporations which are normally referred as Corporation 90 or Corporation 91. Under these decisions, SOEs will have to make themselves privatized with a specific timeline as a performance indicator to the assigned management (chairman and CEO) and ensure divestments of the so call ”non-core investments” in their subsidiaries and associate businesses.
• Our view from the preliminary review by looking at the list of IPO list and their business model has indicated that there will be plenty of opportunities for domestic and foreign investors including industry players in taking this opportunity to be a strategic partner or even a majority buyer at some sectors in Basic Materials, Industrials and Consumer Goods including Retailing and Foods & Beverages.
• However, our review also indicated that there would be a number of challenges in participating in this IPO process including procedural approval by authorities, information asymmetry, and a number of technical matters relating to valuation and the land use rights. In addition, our review has indicated that there are not so many sizeable business. Of the 573 coming IPOs, 302 are region-based business model where their business focuses on certain geographical area namely province or even district.
Our StoxPlus’s Research division has been established as an independent research house in Vietnam to provide local insights to our clients at quality standards of the World’s prestige advisory firms. We are ready to help your organization with specific research and consulting requirements and to make you through with the acquisition of equity stake in SOEs.