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Majority stake in Sabeco up for sale

Released at: 11:15, 30/11/2017

Majority stake in Sabeco up for sale

At the presentation on the competitive offering of State-owned stake at Sabeco on Nov 29 in HCMC (Photo from baocongthuong.com.vn)

Foreign ownership to be limited to 49% at December 18 sale.

by Quang Huy

The Ministry of Industry and Trade (MoIT) said on November 29 that it will sell a majority stake in the country’s largest State-owned brewer, the Saigon Beer Alcohol and Beverage Corp. (Sabeco), next month but will limit foreign ownership to 49 per cent, in an ambitious deal it hopes will rake in at least $5 billion.

More than 340 million shares, amounting to 54 per cent of the company, are up for grabs, but foreign ownership will be capped to safeguard the local brand, the Head of MoIT’s Industry Department, Mr. Truong Thanh Hoai, told a briefing on November 29 in Ho Chi Minh City. The share price will be set at a minimum of $14 at the sale, scheduled for December 18.

Foreign investors are limited to a 38.59 per cent stake in the brewer, with some 10 per cent already being foreign-owned, with the remainder held by the government. The auction has attracted interest from 15 large foreign investors, including Asahi and Anheuser-Busch, Sabeco’s Chairman Mr. Vo Thanh Ha said. The shares will be offered in a single tranche.

Mr. Hoai said he expects Anheuser-Busch to show keener interest in Sabeco as it needs to expand its local market share, while Heineken, with a 5 per cent stake in Sabeco, may not want to spend a huge amount as it already has a considerable slice of the market. The government won’t relax the stake limit it has set for foreign investors, he said.

Sabeco, which owns household names such as Saigon Special and 333, said it was committed to “maintaining and developing Vietnam’s beer trademark” in limiting foreign control of the company. “Through the two recent roadshows in Singapore and London, we saw a very high level of interest,” Mr. Hai said. “Most investors highly value Sabeco’s business performance and the potential of the country’s beer market.”

Sabeco’s shares surged 5.9 per cent to $15.1 at the close of trade on November 29 on the Ho Chi Minh Stock Exchange. They have more than doubled since their December 2016 listing on expectations of the stake sale, which the government announced in August last year.

Sabeco is planning to launch one or two products and drive up its market share to 42-43 per cent next year, from about 41 per cent now, CEO Mr. Nguyen Thanh Nam told investors.

The sale, which officials originally hinted might happen at the beginning of this year, is part of the government’s equitization push as it seeks to rein in mounting public debt. As part of the promised reform, shares of several State-owned enterprises (SOEs) are to be sold off, though plans have repeatedly stalled.

Vietnam’s public debt hit 63.7 per cent of GDP at the end of last year and is predicted to inch up to 64.8 per cent by the end of this year, according to official figures. The government-sanctioned debt ceiling is 65 per cent of GDP.

With a population of 95 million people, Vietnam is one of Asia’s leading per capita beer drinkers. Crown jewels Sabeco and fellow State-owned firm the Hanoi Beer Alcohol and Beverage Corp. (Habeco) are the country’s leading brewers, though some foreign players such as Heineken, Carlsberg, and Sapporo also have a strong foothold in the market.

Dizzying economic growth has seen per capita incomes in Vietnam more than double in the past decade to over $2,200 today, with newfound disposable incomes largely spent on consumer goods.

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