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2016's 'hottest' IPO approaching

Released at: 13:09, 15/08/2016

2016's 'hottest' IPO approaching

Photo: Duc Anh

Interest in late-August IPO of VEAM stems from revenue stream and holdings in key auto joint ventures.

by Duy Anh-Quynh Nguyen

The Vietnam Engine and Agricultural Machinery Corporation (VEAM) has been negotiating with companies that have expressed an interest in becoming its strategic investor, following its upcoming IPO on August 29.

There has been no official announcement to date and VEAM "is currently preparing a list of potential strategic investors to submit to MoIT, with an approval deadline of August 22", a representative from VEAM told VET.

VEAM - the big local partner in joint ventures with foreign auto manufacturers such as Japan's Honda and Toyota and US's Ford - and its consulting unit the Saigon-Hanoi Securities Joint Stock Company held a roadshow on August 12 to announce the investment opportunities in its August 29 IPO.

Under the Ministry of Industry and Trade (MoIT), VEAM secured the Prime Minister’s approval in April to divest 49 per cent of the State’s holding.

VEAM will publicly auction 167 million shares, equal to a stake of 12.57 per cent, which will reap VND2.3 trillion ($103.2 million) at an initial share price of VND14,290 ($0.64). It will also sell 36 per cent to strategic investors, or 478 million shares.

Post-equitization VEAM’s charter capital will be VND13.3 trillion ($597 million), with the State holding 678 million shares, or 51 per cent. Employees will hold 0.43 per cent, or 5.7 million shares.

The IPO is considered the “hottest” of the year, not only because of VEAM’s revenue but also its holdings in joint ventures.

VEAM currently holds 30 per cent of Honda Vietnam and 20 per cent of Toyota Vietnam. It also holds a total of 50 per cent in Ford Vietnam when taking into account the holding of a subsidiary, Song Cong Diesel Company (DISOCO), in the automaker. According to VEAM officials the dividends will continue for 20 more years.

VEAM’s 2015’s financial statement saw the majority of its profit coming from dividends in these three joint ventures. Last year it reported after-tax profit of VND3.3 trillion ($148.1 million), with dividend revenue at VND3.4 trillion ($152.6 million). 

The Vietnam N.A Motor Company (Vinamco) has been reported by local media as having expressed an interest in becoming VEAM’s strategic investor and securing the 36 per cent on offer. PR Manager of Vinamco, Ms. Tran Thi Hieu Thao, told VET that the company would not confirm the media reports.

Vinamco acquired 97.7 per cent of shares in the State-owned automaker Vietnam Motors Industry Corporation (Vinamotor) in early 2016 for VND1.25 trillion ($55.6 million). It has been rumored that Vinamco has a tight relationship with the BRG Group, the property developer that has been actively seeking a slice of several other State-owned entities.

Since its establishment in 1990 VEAM has led the domestic engine and agricultural machinery market with a market share of 15 to 25 per cent. It also distributes engines and accessories for motor cars and to motor vehicle manufacturers via its subsidiaries.

  • TAGS
  • VEAM
  • automobile
  • Toyota Vietnam
  • Ford Vietnam
  • Honda Vietnam
  • Vinamotor

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