24 Vietnamese rail companies to go private this year

Thee single-entity limited enterprise includes Hanoi Railway Transport, Saigon Railway Transport, Gia Lam Train and Di An Train, alongside 20 other rail-infrastructure management businesses.

They are expected to begin operations as joint stock firms on January 1 next year.

The Ministry of Transport has approved the equity plans for the companies, which will sell part of the state’s stake and issue more shares to increase their charter capital.

According to VNR reports, the state will maintain a 60-per-cent stake in Hanoi Railway Transport and Saigon Railway Transport, while 28 per cent of these companies’ equity will be offered to investors, and 12 per cent to employees.

In Gia Lam Train and Di An Train, the state will retain a stake of 75 per cent, while investors will be able to hold between 6 and 16 per cent, and employees will own between 9 and 19 per cent.

For the other 20 companies, the state holding will be 51 per cent, while between 5 and 14 per cent will be reserved for investors, and employee share will be 35-44 per cent.

VNR chairman Tran Ngoc Thanh said the equity plans were being implemented on schedule and were suitable for conditions in the rail sector, although the schemes face significant challenges related to the fate of labourers and share sales.

The VNR currently has a staff of 25,500, which will be reduced to around 23,450 after the 24 member companies are privatised.

This means that more than 2,000 employees will be out of work, leaving a policy puzzle for the companies, especially when there are only two months left for them to implement the IPOs and deal with related procedures.

Moreover, no strategic investors have expressed interest in buying shares of these companies, even those with greater foreign offerings.

"However, we are determined to take the next steps," Thanh told Giao Thong, the newspaper of the Transport Ministry.

"We cannot avoid obstacles, but we have to overcome them because this innovation process is unavoidable," he said.

Hoang Dang Khoa, chairman of Ha Lang Railway Management Co, said: "The employees are willing to buy stakes and contribute capital [to the company] if outside investors are not interested" in the IPO.

Vu Anh Minh, director of the Finance Ministry’s Corporate Management Department, said the VNR members were among 28 units in the transport sector that are to go private this year.

The Central Hospital of Transport has completed its IPO, while the Airports Corporation of Vietnam plans to introduce its IPO in Hanoi and Ho Chi Minh City from November 19-23, before making the offering on December 12.