Speaking at a seminar in Ho Chi Minh City last Friday, Lito Camacho, deputy chairman of Credit Suisse in Asia Pacific, said normally equitization of state enterprises would help develop the capital market.

But there was no single formula for successful equitization given the diversity of economies, political systems, and types of capital markets, he said.

Selling shares in big corporations would usually attract many investors, he said, but there were some prerequisites: The equitization program had to be in tune with the overall economic policy of the government and the government must be clear in its policies.

Credit Suisse had consulted governments in the Philippines, Malaysia, and the UK on equitization and from his experiences in these countries, Camacho said, equitization must be transparent and predictable and the government should have the will to go through with it.

It must also have the skill to gather support among the stakeholders, he said.

The finance ministry told the meeting that almost 20 percent of state-owned companies has been equitized.

But Dominic Scriven, director of the Vietnam-focused fund manager Dragon Capital, said the figure was only 10 percent.

Though the equitization process had admittedly been speeded up it remained leisurely, he said.

But it had created investment opportunities for his 12-year fund which lost a quarter of its capital during the initial years in Vietnam, he said.

State enterprises should be valued by professional financial companies and rating institutions in preparation for equitization, he said.

Le Song Lai, deputy general director of the State Capital Investment Corporation, said forthcoming IPOs by large state corporations would boost the stock market by sustaining investor confidence which had fallen together with the index.

The seminar, titled Equitization: The Road Ahead, was organized  by the Vietnam-EU Business Forum, the European Chamber of Commerce in Vietnam, and the Vietnam Chamber of Commerce and Industry.

Forthcoming IPOs

The second largest bank by assets, the Bank for Foreign Trade of Vietnam (Vietcombank), which has a chartered capital of VND10 trillion (US$618 million), announced plans to launch its IPO this month and list by October.

But with the month drawing to a close, there has been no further information from the bank.

The Saigon Beverage Corp (Sabeco) and the Hanoi Beverage Corp (Habeco) have set their IPOs for the end of the third quarter.

The Mekong Housing Development Bank (MHB) with a chartered capital of VND1 trillion plans an IPO in October, and the Industrial and Commercial Bank (Incombank) and the Bank for Investment and Development of Vietnam (BIDV), which are capitalized at VND9 trillion and VND14 trillion, in the fourth quarter.

Vietnam’s second largest mobile phone service provider, VMS MobiFone is eyeing a December IPO.

Source: Thanhnien.