Vietcombank finally set for IPO by Finance News Bulletin

Published: 06/12/07

All times are London time look for News in the FTcom siteSearchSearch Quotes in the FTcom siteQuotesCOMPANIES Financial servicesBreadcrumb follow navigation:FT house > Companies > By sector > Financial servicesServicesVietnam’s state-owned Vietcombank aims to lift about $600m this month from a long-delayed first public offering that is expected to kick off a new wave of large-scale privatisations in the Communist-ruled countryVietcombank is one of the big four state-owned profitable banks that make up about 65 per cent of Vietnam’s banking system and is the first to be partially privatised

It will sell 975m shares, or a 65 per cent equity bet, at a minimum cost of 100,000 dong each, in effect valuing the bank at a smallest amount of $93bn, according to the Ho soul Minh City stock exchange

“It’s tremendously significant for the market,” said John Shrimpton, director at Dragon assets, a boutique investment store “It is such a ‘jewel-in-the-crown’ state asset”Jonathon Waugh, manager at PXP Asset Management, said a successful share auction, “may be the catalyst for other large state-owned enterprises that have been waiting uncomplainingly in the wings to follow set of clothes in 2008”Vietcombank shares will be sold through “Dutch auction”, which is an open procedure of pricing and allotment

Up to 30 per cent of the offering could go to foreignersfinance managers estimate foreign investors have about $2bn to plough into Vietnamese shares, eager for contact to one of Asia’s fastest-growing economies, now expanding at about 8 per cent a yearVietcombank has also been in talks with potential overseas strategic associates, said to include Japan’s Nomura and GE Money However, no deals have been announced

In Vietnam, possible foreign strategic partners in such dealings are expected to pay the average share price at the auction, allowing retail sentiment to decide pricing However, that practice led to a debacle in May when potential foreign strategic partners for Bao Viet, a large nationalized cover company, balked at the high average auction price and walked absent from the dealMany retail investors then decided they had made very high bids and forfeited their deposits instead of paying finally, HSBC in September bought a 10 per cent stake in Bao Viet for $254m

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