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October 20 deadline set for Sabeco divestment plan

Released at: 15:01, 16/10/2017

October 20 deadline set for Sabeco divestment plan

Photo: cafebiz.vn

MoIT must prepare and submit divestment plan for Vietnam's largest brewer by deadline.

by Quang Huy

As the Prime Minister has agreed on the size of the stake to be sold, the Ministry of Industry and Trade (MoIT), which controls the Saigon Beer Alcohol and Beverage Corp. (Sabeco), now has until October 20 to submit a divestment plan for the country’s largest brewer.

Many foreign brewers have been looking at a possible investment in the producer of the Bia Saigon and 333 brands since it was earmarked for equitization, but long-stated plans from the government, which still owns about 90 per cent, to sell a majority stake have been met with repeated delays.

The sales plan from the ministry will be reviewed by Deputy Prime Minister Vuong Dinh Hue, who oversees economic and financial activities, before it is sent for a higher level of approval within the government. After government approval is secured, MoIT will prepare a prospectus for the sale, said Mr. Dang Quyet Tien, Head of the Ministry of Finance’s Corporate Finance Department.

“The Prime Minister has agreed to sell 53.59 per cent this year, but whether it can be sold this year we don’t know as yet,” Mr. Tien told the media last week. “Several foreign brewers, including Kirin and Anheuser-Busch InBev, have been in touch and are waiting.”

If completed, the deal would reduce the State holding to 36 per cent from the current 89.6 per cent, with the new ownership structure assuring the government will retain the right to veto on any company decisions.

The value of the shares up for sale is estimated at $4.2 billion. Currently enjoying a 40 per cent share of Vietnam’s beer market, Sabeco has maintained charter capital of VND6.4 trillion ($284.4 million) since its equitization in 2008, when 10 per cent was offered for sale, half of which was purchased by Dutch brewer Heineken.

MoIT has now been working with advisers on various options for the stake sale. The government wants to fully divest from Sabeco and the smaller Hanoi Beer Alcohol and Beverage Corp. (Habeco).

Sabeco’s shares closed at VND272,000 ($12) apiece on October 13, putting its market value at VND174.4 trillion ($7.7 billion). Expectations that the government would sell its stake in Sabeco has helped the share price jump nearly 110 per cent since its debut on the Ho Chi Minh Stock Exchange (HSX) on December 6 last year.

The spike in Sabeco’s share price due to high demand and a small float has also complicated matters, making it difficult for industry buyers - including Heineken - to step in.

In 2016, Sabeco recorded VND30 trillion ($1.32 billion) in revenue and VND4.6 trillion ($202.5 million) in after-tax profit, yearly increases of 10 per cent and 28 per cent, respectively. It posted VND15.75 trillion ($693.3 million) in revenue in the first half of this year and VND2.56 trillion ($112.7 million) in after-tax profit.

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