Nguyen Kim Tung, Managing Director of Indochina Capital, said that it was the right decision by the government to change the procedure of choosing foreign strategic partners.

“Selling shares to foreign strategic shareholders at prices higher or equal to the average auction price would be the best choice for Vietcombank,” said Mr Tung.

Leaders of securities companies also applaud the decision, saying that this will help minimise the risk that Vietcombank may sell its assets cheaply to foreigners.

Meanwhile, investment funds are cautious when commenting about the change.

“The government allows Vietcombank to sell 6.5% of chartered capital only to outside investors. The short supply will push the price up, while overly high prices will keep the strategic shareholders, that can give the best support to Vietcombank, away,” the director of an investment fund said.

That is also the worry of many investors since the share price, once again, has been put on the top priority in selling shares.

Investment funds say that right after the roadmap for Vietcombank’s IPO was defined by the government, they were ready to disburse for the IPO.

“The information we have got said that the starting price of Vietcombank’s shares is VND80,000/share, which proves to be the suitable level in our calculation,” the director said.

Gov’t puzzled by Vietcombank’s equitisation?

The investors’ circle says that the change in the procedure of selecting foreign strategic partners shows the country’s inexperience in equitisation.

On September 26, 2007, the Prime Minister signed the decision on approving the equitisation plan for Vietcombank, which said that the selection of foreign strategic partners would be carried out before making IPO. This procedure proves to be contrary to the one that was applied with Bao Viet insurer (IPO first, and then choosing strategic partners).

After the IPO, which showed the average auctioned price of VND73,910/share, Bao Viet resumed the negotiations with the institutions which registered to become strategic shareholders. However, at that time, several institutions gave up the game, saying that the price was unacceptable for them.

As a result, only HSBC Insurance Asia Pacific purchased 10% of Bao Viet’s shares (at first, Bao Viet planned to short-list two institutions to sell 18% of total shares).

The same situation was seen in choosing domestic strategic partners. Before the IPO, three domestic corporations, including VNPT (telecom service provider,), Vinashin (shipbuilder) and Air Service Company, committed to purchase Bao Viet shares at the average auctioned prices to become strategic partners. However, after the IPO, Bao Viet had only one buyer, Vinashin, which agreed to buy 3.56% of shares, less than half of the shares Bao Viet planned to sell to domestic strategic shareholders.

As such, when the government changes the procedure of selecting foreign strategic shareholders for Vietcombank, it may learn from Bao Viet’s lessons that several registered investors may give up, i.e. shares may not sell out. This also means that Bao Viet’s scenario may be repeated, in which it will have to reduce the chartered capital and raise the state-owned share proportion.

Foreign investors will jump?

The biggest question investors want an answer to is how many percent of shares will foreign investors be allowed to buy among the 97.5mil shares (VND975bil worth of face value) Vietcombank will sell to the public?

Analysts guess that domestic investors will be allowed to take the larger proportion of shares, which also means that Vietcombank’s share prices will be decided by domestic investors, not foreign strategic shareholders. However, analysts have also warned that foreign investors will scramble to buy shares by offering very high prices, pushing the average auction price up.

Source: Tuoi tre.