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SCIC to sell 3.33% of Vinamilk

Released at: 17:25, 16/10/2017

SCIC to sell 3.33% of Vinamilk

Photo from news.zing.vn

Sale slated for November 10, with fewer restrictions imposed compared to disappointing sale last December.

by Quang Huy

The State Capital Investment Corporation (SCIC) announced on October 16 that it plans to sell 3.33 per cent of the Vietnam Dairy Products JSC (Vinamilk) on November 10, minus the restrictions that applied to a similar sale last year, when only a portion of the offering was snapped up.

Vietnam’s largest listed firm by market value, Vinamilk is among a handful of State assets to attract significant interest from foreign investors as the government works to reform State-owned enterprises (SOEs).

A starting price is likely to be announced seven to ten days prior to the sale, SCIC Chairman Mr. Nguyen Duc Chi told a media briefing. He previously said the sale could fetch VND6.5 trillion to VND7 trillion ($286 million to $308 million).

The November sale will be absent some of the restrictions applied at last year’s disappointing sale, such as the purchase cap on individual investors, Mr. Chi said. Last December, the representative of State capital offered 9 per cent of Vinamilk but sold just 5.4 per cent to two investors - both units of existing shareholder Fraser and Neave (F&N).

Investors looking to gain a degree of control over Vinamilk were also deterred by the size of stake on offer. The government initially planned to sell its entire 44.7 per cent stake, but still retains 39.34 per cent. If the November sale is successful, its stake will fall to 36 per cent - enough to retain veto rights.

The sale is vital to SCIC’s overall scheme initiated in 2015 to divest from ten leading SOEs, including Vinamilk, FPT, FPT Telecom, Bao Minh Insurance, and Binh Minh Plastic. Another five SOEs were added to the list this year. The lack of progress and major losses have been variously attributed to regulatory hurdles, mismanagement, wrongdoings, and the time needed for the new government cabinet to settle in.

Earlier this month, UBS AG Singapore and Saigon Securities Incorporated (SSI) were selected to advise on the sale of the 3.33 per cent stake in Vinamilk, replacing Morgan Stanley Asia (Singapore), which along with SSI and VinaCapital Corporate Finance Vietnam advised on the last divestment.  

During the first nine months of this year, Vinamilk saw its revenue rise by 10.34 per cent year-on-year to VND38.76 trillion ($1.7 billion), or 76 per cent of the annual plan. Pre-tax profit rose by 12.2 per cent to VND10.1 trillion ($444.6 million), while after-tax profit increased by 13.6 per cent to VND8.5 trillion ($374.2 million).

The company projects revenue will reach VND51 trillion ($2.24 billion) this year and net profit VND9.73 trillion ($428.3 million).

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