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Banking & Finance

Vietcombank & GIC sign MoU on stake sale

Released at: 06:36, 30/08/2016

Vietcombank & GIC sign MoU on stake sale

Photo: Duc Anh

Singaporean sovereign wealth fund GIC Private Limited to purchase 7.73% of Vietcombank.

by Duy Anh

Vietcombank signed a memorandum of understanding (MoU) on August 29 with Singaporean sovereign wealth fund GIC Private Limited over the sale of a 7.73 per cent stake.

The transaction is expected to be completed by the fourth quarter.

The MoU was signed during the Singapore-Vietnam Business Forum, held in conjunction with the visit by State President Tran Dai Quang to Singapore.

GIC will purchase 305,810,895 new shares in Vietcombank, part of the bank’s private placement of 359,777,745 new shares.

The investment by GIC will increase Vietcombank’s charter capital and help it prepare for the implementation of the BASEL II standards. It will also maintain its leading position in Vietnam’s banking sector.

“This investment reflects our confidence in Vietnam’s long-term growth potential,” said Amit Kunal, head of GIC’s direct investments group for Southeast Asia in private equity and infrastructure. “We believe that with Vietcombank’s strong management team and market positioning the bank will be able to capitalize on the strong growth trajectory of Vietnam’s banking industry.”

Credit Suisse acted as placement agent and financial adviser to Vietcombank. The share’s trading price on August 29 was VND59,500 ($2.6). If the shares are sold at more than half the market price the bank will reap more than VND10 trillion ($448.2 million).

It was reported in April that Vietcombank would issue bonus shares to existing shareholders to increase its charter capital, together with private offerings to foreign investors.

In the first stage charter capital would be increased from VND26.65 trillion ($1.19 billion) to VND35.97 trillion ($1.61 billion) by issuing bonus shares to existing shareholders at a ratio of 0.35:1.

In the second stage, Vietcombank would issue additional shares equivalent to a 10 per cent stake to foreign investors, increasing its charter capital to VND39.57 trillion ($1.77 billion).

Vietcombank Chairman Nghiem Xuan Thanh said that the foreign partner would make an offering price and the Vietnamese Government would make the final decision.

The stake sale to a foreign partner was approved by the bank’s Board of Management during the annual general meeting in April.

With a 7 per cent holding, GIC will become the third-largest investor in the bank. Vietcombank was fully-owned by the State until it underwent equitization in 2007, following which it has two major shareholders: the State Bank of Vietnam (SBV), with 77.11 per cent, and Japan’s Mizuho Corporate Bank Ltd, with 15 per cent. Other shareholders (including domestic organizations and individuals and foreign organizations and individuals) hold 7.89 per cent.

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