Government to amend decree to help enterprises choose strategic investors

VNStockNews.com - Equitized enterprises will be allowed to sell shares to foreign strategic investors at negotiable prices instead of the IPO average price. The move hopes to help equitized enterprises find foreign strategic shareholders.

Deputy head of the Steering Committee on Enterprises Renovation and Development Pham Viet Muon, said on December 1, 2009 at the Vietnam Business Forum (VBF) that the Government plans to amend Decree 109 in order to create more favorable conditions for enterprises to choose foreign strategic investors.

Muon said foreign investors and equitized enterprises can negotiate sale prices of the equitised enterprises and investors can purchase stakes before the enterprises make initial public offerings (IPO)

Under current regulations, the price at which shares are sold to foreign strategic investors must be the average IPO price in order to ensure optimum benefit for the State as the owner of the enterprises. However, this method of defining the stake sale price has been considered unreasonable. Foreign investors say they are overcharged despite bringing big benefits to enterprises, including corporate governance and management technology.

Also according to Muon, foreign investors will be encouraged to work directly with enterprises to negotiate to become their foreign strategic investors.

The State is still holding a big number of shares at many big equitized enterprises. The proportions are as high as 85-90 percent in some cases, such as the Bank for Foreign Trade of Vietnam (Viecombank) and Vietnam Industrial and Commercial Bank (Vietinbank).

Only two big enterprises have successfully chosen foreign strategic shareholders, including PetroVietnam Insurance (PVI), which has chosen Hong Kong and Shanghai Banking Corporation (HSBC) and Hanoi Brewery Corporation (Habeco) which has chosen Carlsberg.

Vietnam has equitized some 4,000 state owned enterprises, while the State is still holding 53 percent of the total chartered capital of the enterprises. However, the State plans to reduce the proportion of stakes it holds to 20 percent, which means that it will sell the other 33 percent, estimated at 100,000 billion dong , will be sold to foreign investors.

To date, only 430 out of 4,000 equitized enterprises have been listed on the stock market.

Vietnam plans to equitize 1,000 enterprises by 2015. The list of enterprises includes the Vietnam Textile and Garment Group (Vinatex), the Bank for Investment and Development of Vietnam (BIDV), VMS, a telecom service provider, and the Vietnam Steel Corporation (VSC).