Viet Nam’s biggest state-owned bank Vietcombank yesterday held a press conference to officially announce its long-awaited Initial Public Offering (IPO) which is to auction 6.5 percent of the bank’s equity on Dec. 26th.
The Bank for Foreign Trade of Viet Nam, as it is also known, will auction 97.5 million shares at a starting price of VND100,000 (US$6.25) each at the Ho Chi Minh Stock Exchange (HOSE). This will raise at least US$609 million for the country's fourth-largest lender.
While each share’s face value is only VND10,000, bank Chairman Nguyen Hoa Binh told the press yesterday that the reserve price is reasonable and fixed based on assessment by reliable authorities and the current demand-supply ratio. It is also based on successful IPO recently issued by major groups like Bao Viet and PVFC.
Vietcombank will list on the exchange about three months later and the rest of the shares will be opened up to foreign and local investors.
In this upcoming IPO, individual investors can buy up to 500,000 shares while institutional investors are limited to under 4 million shares.
Foreign investors are also restricted to 30 percent of shares or 1.95 percent of the bank’s chartered capital of VND15 trillion ($937.5 million).
Those eligible for the IPO exclude those the bank considers “strategic partners”. Chairman Binh said the bank will allow foreign strategic partners to buy 15-20 percent later.
“This restriction on foreign investors is aimed at balancing domestic and foreign investments and protect domestic investors”, Binh explained.
In 2009, Vietcombank is expected to list in Singapore or Hong Kong and foreign investment is expected to mount to 25 percent, Binh elaborated.
Three other banks are also expected to list this year: Vietindebank, Incombank and Mekong Housing Development Bank. While the biggest lender, Agribank, doesn’t plan to equitize until next year.
According to Vietcombank’s third-quarter financial report, the bank has total assets of VND186 trillion (US$1.6 billion), including fixed assets of VND725.7 billion (US$45.5 million).
Total equity as of September 30, 2007, was VND11.7 trillion ($731 million). The bank posted after-tax profits of VND529 billion ($33 million), a drop of 32.68 percent from the same period last year.
In 2006, Vietcombank’s net profit was VND2.9 trillion (US$190 million) but dropped to VND1.9 trillion (US$125 million) in 2007.