Three of four potential investors specialize in automotive businesses and services.
The competition for securing a dominant stake in the Vietnam Motors Industry Corporation (Vinamotor) has heated up, with a number of domestic players expressing their willingness to become its strategic investor.
Two new names joining the race are the Vietnam NA Motor Co. (Vinamco) and the Thanh Cong Ninh Binh Auto JSC (TNA). TMT Motor JSC (TMT) and Sacom Wires and Cables Co., Ltd (Sacom) have already expressed interest.
In documents submitted to the Minister of Transport, Vinamco pointed towards its ten years of experience in the automotive business and related services and noted it was one of the first Honda dealers in Vietnam. "With major advantages including good foundation and development, management capacity, and strong financial resources, Vinamco becoming a strategic shareholder of Vinamotor would benefit both sides," the document stated, but there was no indication of the stake it sought to acquire.
Meanwhile, TNA, a subsidiary of the Thanh Cong Group, wishes to acquire all of the State-owned capital in Vinamotor. The company specializes in the assembly and distribution of tourist vehicles and is known as a Hyundai dealer in distribution and maintenance of tourist vehicles and light trucks.
TMT had already announced it will sell VND1.5 trillion ($70.2 million) worth of its own shares to fund the purchase. "If the acquisition is successful, TMT will restructure Vinamotor to make its operations more efficient," CEO Bui Van Huu told the company's annual general meeting in early March. The company enjoys advantages over Sacom, who was the first to make public their intention to acquire a stake in Vinamotor, as it is a Vietnam-based manufacturer of automobiles, light trucks and motorcycles.
Sacom specializes in producing copper cables, fiber optic cables, and magnetic wire, and submitted a proposal to the Ministry of Transport (MoT) in early January on acquiring all of Vinamotor's State capital. It proposed a figure of VND855.81 billion ($40 million) for more than 85 million Vinamotor shares at a price of VND10,000 ($0.47) per share, or 97.7 per cent of the charter capital held by MoT. It was confident it could make Vinamotor's operation become more efficient if the acquisition was approved.
These investors may join in a bidding process to determine the winner.
Although its IPO in March last year was a failure, Vinamotor reported a strong increase in 2014 profits. According to the corporation's financial report it recorded VND65 billion ($3 million) in profits in 2014, which was 590 per cent higher than its target and a 591 per cent increase against 2013.