* F&N to buy 5.4 pct for $500 mln, stake to rise to 16.35
* But no other buyers came forward in 9 pct share sale
* Vinamilk one of Vietnam's most attractive assets
* Investors put off by cap of 2.7 pct for each investor
* Sell-off in Vietnamese shares also hurt sentiment
(Adds F&N comments)
By Mai Nguyen
HANOI, Dec 12 Singapore-listed Fraser and Neave
Ltd is set to boost its stake in Vietnam's Vinamilk
but the sale of shares in one of the state's most
attractive assets failed to draw in other buyers after highly
restrictive investment caps were imposed.
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.
Those sudden restrictions as well as unfavourable market
conditions saw only two bids lodged for the 9 percent of
Vinamilk on offer - both from wholly owned units of Fraser and
The food and beverage firm, already Vinamilk's second
biggest shareholder and backed by Thai tycoon Charoen
Sirivadhanabhakdi, will buy an additional 5.4 percent of
Vinamilk for $500 million to take its holding to just over 16
But other investors stayed away - also put off by a drop in
Vinamilk's share price below the 144,000 dong minimum set by the
government. 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 rate 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
The SCIC, however, said it was pleased with the sale. F&N
paid a $36 million premium to Monday's closing price.
"Given the vulnerable stock markets in Southeast Asia and
Vietnam, Vinamilk's share disposal transaction by the SCIC can
be seen as a success," it said in a statement.
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 the 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 bourse 10 years ago.
"We are delighted to have this opportunity to increase our
stake in Vinamilk," a spokeswoman for F&N said in an email.
"The group's additional investment reflects our confidence
in Vinamilk's management, growth and long-term prospects, as
well as commitment to growing our presence in Vietnam," she
Other closely watched offerings coming up include the sale
of government shares in Vietnam's top brewers Sabeco and Habeco.
The government owns nearly 90 percent of Sabeco and is keen to
unload its entire stake by 2017.
That sale process is slated to kick off in April, the Wall
Street Journal reported on Monday, citing people familiar with
the matter, adding that at least 40 percent of the company -
worth nearly $2 billion at current market prices - would be on
Privately owned budget carrier Vietjet is also due to sell
shares later this year.
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; Additional reporting by Saeed Azhar;
Editing by Edwina Gibbs and Mark Potter)