By Tim Johnston in Bangkok
Published: September 26 2008 03:00
Vietnam’s stalled privatisation plans are set to restart with the flotation of 20 per cent of shares in Vietinbank, the country’s fourth largest lender.
The Vietnamese government said yesterday that half the offering would be available to foreign investors but it has not put a price on the offering or given a date for the IPO. Vietinbank, which until this year was known as the Industrial and Commercial Bank of Vietnam, had assets of 194,000bn dong ($11.7bn) at the end of June.
In Vietnam, IPOs of former state-owned enterprises take place in two stages. They are “equitised” with share capital issued and investors are then invited to apply for shares. But the share capital is not listed and easily tradeable until it is “introduced” to the stock market at a later date.
Vietnam’s privatisation programme has a chequered history. It is a key element of the country’s move towards a market economy but has been plagued by overpriced issues and opaque conditions that have put off many foreign investors. The programme has been largely on hold since February when attempts to sell off Hanoi Brewery were heavily undersubscribed after the issue was priced at 40 times earnings.
But some analysts believe the government has learnt from experience.
“There is a kind of realisation that they can’t always sell off state assets at their highest ever price,” said Kevin Snowball, chief executive of PXP Vietnam Asset Management. “They are using this to test the water to see if there is still demand.”
Vietnam’s economy has been struggling. Inflation hit a 17-year high of 28.3 per cent in August, driven by the increased costs of fuel and food but, as the prices of basic commodities have come off their peaks, inflation has dropped slightly, hitting 27.9 per cent in September, raising hopes that the worst has passed.
But the stock market is still languishing, having lost half its value this year.
Vietnam still exerts a strong attraction for investors, particularly in the banking sector. With a population of more than 85m and less than 10m bank accounts, it holds out the possibility of sustained strong growth.