December 8, 2017


After years of delays, Vietnam's privatization plans move up a gear  (Anshuman Daga, Mai Nguyen, 12/08/17, Reuters)

Hanoi has already changed the rules to speed up future privatizations from next year. Among the changes are the introduction of a book-building process for initial public offerings and an easing of its restrictions on strategic partners.

Vietnam is speeding up its privatization drive as it grapples with a deteriorating fiscal picture, including a budget deficit and growing public debt at a time when it wants to devote more money to developing the nation's infrastructure.

Private share sales and listings are booming. Mall operator Vincom Retail VRE.HM raised $741 million last month in Vietnam's biggest equity offering, which attracted cornerstone investors such as Singapore sovereign wealth fund GIC and major U.S. fund manager Franklin Templeton. Total demand for the shares reached $2 billion.

Next year, the government has slated 181 state-owned companies to make divestments of stakes to investors and 64 more for broader share sales through IPOs. Altogether, the government has said it wants to sell stakes in at least 533 companies by 2020 through direct sales or IPOs.

And this doesn't include dozens of companies who were on the 2017 list but won't get to market this year. According to the latest publicly available government figures, Vietnam had only managed 26 divestments in the first eight months of this year from a 135-long list that was planned. The 44 IPOs target this year is also likely to be missed, with only 38 IPOs slated to be completed by year-end, a government committee said.

"You have a lot of global asset managers, frontier market investors, hedge funds and others that want to capture and participate in the growth of emerging markets and frontier markets like Vietnam," said Jeffrey Perlman, Southeast Asia head of Warburg Pincus, which together with a consortium, sold part of its stake in Vincom Retail in the float.

"If you can provide them a conduit with which to do that and a business they can understand, they'll want to participate," said Perlman.

Vietnam's strong economy and roaring stock market underpin its appeal.

Posted by at December 8, 2017 7:19 AM