HANOI Dec 12 The Vietnamese government will
likely fail to sell much of the 9 percent stake it has offered
in dairy firm Vinamilk, one of its most attractive
assets, with investors put off by highly restrictive investment
caps and unfavourable market conditions.
The State Capital Investment Corporation (SCIC), which
represents the government's 44.7 percent ownership in Vinamilk,
took the market by surprise last month when it announced each
investor could only buy up to 2.7 percent of Vinamilk's shares.
That has helped result in just two bids, worth a combined
$500 million, by wholly owned units of Thailand's Fraser and
Neave Ltd for the shares which are due to sold on
Monday. One of the units is already Vinamilk's second-biggest
shareholder with a 10.95 percent stake.
The muddled sale process has underscored Vietnam's relative
inexperience and investor wariness about state control as the
government seeks to push forward with a major privatisation
drive - one that already been hampered due to the small stakes
on offer and concerns about vested interests.
Also detering investors has been a drop in Vinamilk's share
price below the minimum bidding price set by the government of
144,000 dong. The stock has been hit by a sell off in Vietnamese
shares as investors shun emerging markets amid uncertainties
after the U.S. presidential election and a potential rates hike
by the Federal Reserve.
"The minimum bidding price of 144,000 dong is actually not
expensive for a strategic investor in Vinamilk, but the issues
are the timing and the restrictions that come with it," said
Nguyen Thanh Lam, deputy manager at Maybank Kim Eng Securities
Vinamilk, Vietnam's top listed firm by market value, is seen
as one of the country's most attractive companies as it commands
around half of domestic market for dairy goods and has seen
steady earnings growth.
Its shares have jumped 20 times in value since its debut on
the Ho Chi Minh stock exchange 10 years ago.
Other shares offerings coming up include an initial public
offering of budget carrier VietJet Air, which is expected to
raise up to $194 million, and the sale of government shares in
Vietnam's top brewers Sabeco and Habeco.
Fiachra Mac Cana, managing director and head of research at
Ho Chi Minh Securities, said the Vinamilk share sale did not
necessarily bode ill for other asset sales.
"I feel that the sale is actually a good initial step with a
few lessons learned as to how to do better next time," he said.
"In any event, the government hasn't been doing this for
that long so in a way we should expect them to be learning as
($1 = 22,585 dong)
(Reporting by Mai Nguyen; Editing by Edwina Gibbs)