Vietnamese government to sell Vinamilk stake this year

Dang Quyet Tien, deputy director of the ministry’s Department of Corporate Finance, said in a Wednesday press briefing that besides Vinamilk, the government would also sell its stakes in nine other leading state-owned enterprises (SOEs) early next year as part of the country’s new economic strategy.
Tien did not reveal details about the Vinamilk divestment, saying that the sovereignty wealth fund State Capital Investment Corporation (SCIC) was preparing the plans to be submitted to the Finance Ministry and the prime minister soon.
However, he said the divestment process must be executed carefully to avoid any negative impact on the stock market, as investors might focus entirely on Vinamilk. The state ownership in Vinamilk is huge, valued at nearly 100 trillion dong (Bt156 billion), he said.
The government may choose to sell the stake gradually, in portions that can be easily absorbed by the market, he said, adding that the sale will be in accordance with the country’s legal regulations and transparent to ensure interests of the state and the investors.
The Vietnamese government currently holds a 45.1-per-cent stake in Vinamilk. The company’s largest foreign shareholder is F&N Dairy Investment, part of the Fraser and Neave conglomerate, with 11 per cent. That company is controlled by Thai beer tycoon Charoen Sirivadhanabhakdi, who has been making inroads into Vietnam via his Thai Charoen Corp (TCC).
Vinamilk is one of Vietnam’s most sought-after equities, and foreign investors have long been interested in it thanks to its strong prospects and expansion plans. Vinamilk’s shares have increased 18 times since the company was first listed in 2006 to 146,000 dong per share as of mid-May.
In late June, the board of directors of Vinamilk formally approved the removal of its 49-per-cent foreign-ownership cap, paving the way for an expected surge of interest from overseas investors in the company.
Late last year, the SCIC unveiled plans to sell the state’s holding in 10 leading SOEs, which could earn it a total of US$3 billion (Bt105 billion).
The enterprises are Vinamilk, Bao Minh Insurance Corp, Vietnam National Reinsurance Corporation and Tien Phong Plastic JSC, as well as Binh Minh Plastic JSC, Vietnam Property and Infrastructure JSC, FPT Corp and FPT Telecom, along with Ha Giang Mineral Mechanics JSC and Sa Giang Import Export Co.

SOE equitisation
During the press briefing on Wednesday, Tien said the government had instructed the State Securities Commission to impose stricter penalties on SOEs that have been equitised but have delayed listing on the stock market.
He said the government was also scrutinising SOEs that have not been equitised even though their equitisation plans have been approved by the government. He admitted that the equitisation process of SOEs had not met expectations in the first eight months of 2016.
From January-August, SOEs and the SCIC divested more than 2.9 trillion dong and brought in more than 5.7 trillion dong in the process.
Tien attributed the slowdown to restricted investment capital flows in wake of the global and domestic economic difficulties.
In a move aimed at boosting the equitisation the next time, Tien said, the divestment of state capital in SOEs would be implemented through public auctions with no discrimination between domestic and foreign investors.