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Hanel dragging feet post-IPO

Released at: 12:00, 25/01/2017

Hanel dragging feet post-IPO

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Giant apparently not keen to move towards becoming a joint stock company, as required by equitization process.

by Duy Anh

Mention his name and the name of the State-owned enterprise he has been at since 1987, the Hanel Co. Ltd, and an air of respect will materialize. Chairman and CEO of the Hanoi-based company, Mr. Nguyen Quoc Binh, has guided it through hardships over many years, in a State sector plagued by inefficiency, low profitability, and bad debts. Since its initial public offering (IPO) in April last year, however, when the firm was to be equitized, no transformation has taken place to turn it into a joint stock company.

Diversified investment

Originally operating in the electronics production, information technology and telecommunications sectors, Hanel has grown tremendously and its businesses now covers real estate, support industries, and logistics. It has nine subsidiaries and five associated companies, such as Hanoi Telecom, which owns telecoms provider Vietnamobile. It became the leading investor in a 43-ha high-tech park located in Hanoi’s Long Bien district last year, with total investment of VND10.5 trillion ($471.89 million). It previously invested in a software technology park in the capital and the South Hanoi-Hanssip support industry park. The firm provides software solutions for government and businesses, in traffic, health, education and smart agriculture, contributing significantly to the country’s modernization.

Hanel has been an industry pioneer, introducing the Made-in-Vietnam Hanel TV. It has also been a pioneer in developing support industries to support the country’s electronics sector. Of particular note, it was selected to provide information technology systems for the implementation of the national single window in the Ministry of Transport. Helping administrative reform towards e-government, the systems will later connect with other ministries such as Industry and Trade, Finance, Health, and Agriculture and Rural Development.

The most well-known deal under Mr. Binh’s time at Hanel was the acquisition of 30 per cent of the Hanoi-based five-star Daewoo Hotel, in 1996. In 2012, Hanel acquired 70 per cent of the hotel after the South Korean parent company, Daewoo, went bankrupt, at a price believed to be $100 million. It then sold 40 per cent to the Hop Thanh Mineral JSC and the Hop Thanh 1 JSC, and despite still being under wraps the figure received from the deal is rumored to be just $5 million. It still holds 30 per cent in the hotel.

Perhaps the sale of its stake in the Daewoo made it less attractive, as during its equitization, which Mr. Binh viewed as a turning point for Hanel, it didn’t receive much attention from the public. Only 3.9 million shares, or 20.4 per cent of the total of 19.13 million on offer, were sold. There were 42 individual investors at the auction, and the two institutional investors with the highest bid volume reached three million shares. Post-IPO, the State stake stood at 29 per cent while 9.94 per cent was held by general investors. It also picked up two strategic investors: the Tien Viet Tech Co., with 36 per cent, and Singaporean-Sebrina Holdings Ltd, with 25 per cent.

Passing the buck

While the country is striving to hasten the SOE equitization process, many leaders at SOEs don’t want to lose control of enterprises that have made them wealthy. For Hanel, nearly a year has passed since the IPO, and the individual investors that bought shares remain frustrated. Its transformation into a joint stock company lies somewhere over the horizon still. Despite having received multiple complaints from investors, the firm has steadfastly refused to reply. VET has tried to reach Mr. Binh numerous times in the last couple of months, and has received the same answer from his office every time: he has gone overseas.

According to Mr. Nguyen Hoang Hai, Vice Chairman of the Vietnam Association of Financial Investor (VAFI), Hanel’s case is in breach of the law. Under Clause 45 in Decree No. 59 from 2011, regarding the transformation of 100 per cent State-owned firms into joint stock companies, within 30 working days of selling stakes they must hold their first annual general meeting to become a joint stock company and conduct the necessary registration procedures. “Enterprises taking money from investors need to act responsibly,” Mr. Hai said.

The selection of its strategic investors has also been questioned by many, as the Tien Viet Tech Co. was only formed in 2015. Hanel has stated it is not their duty to answer such questions and passed the buck to the Steering Committee on its equitization, which was created by the Hanoi People’s Committee, where Mr. Binh is a delegate.

Conversely, Mr. Pham Cong Binh, Deputy Director of the Hanoi Department of Finance and a member of the Steering Committee on Hanel’s equitization, told local media he is aware of the fact that Hanel is in breach of Decree No. 59 but responsibility lies with the company’s management, not the Steering Committee.

Hanel Company Limited

Establishment: December 17, 1984

Chairman and CEO: Mr. Nguyen Quoc Binh

Managing agency: Hanoi People's Committee

Initial Public Offering: April 20, 2016. After IPO, State owns 29 per cent of charter capital. Charter capital after equitization: VND1.92 trillion ($84.4 million)

Revenue of parent company in some recent years:

Year

2012

2013

2014

2015 1H

2016 (estimated)

Revenue

VND619 billion ($27.2 million)

VND626 billion ($27.5 million)

VND884 billion ($38.9 million)

VND205 billion ($9.02 million)

VND766 billion ($33.7 million)

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