STATE CAPITAL DIVESTMENT GAINS MOMENTUM IN VN WITH HIGH-PROFILE DEALS IN FOCUS

State capital divestment in Việt Nam's enterprises has regained momentum, with the State Capital Investment Corporation (SCIC) announcing plans to sell capital in 31 companies, attracting significant market interest.

The State Capital Investment and Trading Corporation (SCIC) recently unveiled its second-phase divestment list for 2024, which includes prominent businesses like FPT Corporation, Becamex IDC and Tiền Phong Plastic. The announcement generated excitement in the market.

The liquidity of BCM shares of the construction and development giant Becamex IDC surged following news of the State's plan to divest 30 per cent of its capital in the company. This development was accompanied by a substantial 23 per cent increase in the market price over the past month.

The market's positive reaction can be attributed to the scarcity of high-profile State divestment deals in recent times. Divestment and equity activities had slowed since the COVID-19 pandemic.

Notably, enterprises with strong financial potential and positive growth prospects have become attractive targets for savvy investors, yielding fruitful outcomes. One such example is the case of VGV shares from VietNam National Construction Consultants Corporation - JSC.

By mid-2022, SCIC acquired 87 per cent of VGV's capital, which currently has a charter capital of VNĐ357.7 billion, no debt and a cash balance exceeding VNĐ200 billion. With nearly 70 years experience, VGV and its subsidiaries have undertaken significant national projects, including the Mỹ Đình National Convention Center, National Assembly House, Keangnam office complex, Hà Nội Museum and the Military Medical Academy. VGV also holds a 2,500sq.m plot of land in Hà Nội.

VGV's subsidiaries and affiliated companies within its ecosystem also possess valuable land assets. For instance, Việt Nam Water, Sanitation and Environment JSC (VWS) owns a 650sq.m plot of land in Hà Nội's Hoàn Kiếm District and extensive land holdings in Bắc Ninh and Hưng Yên provinces.

Other companies like VCC Engineering Consultants JSC (VCC), Consultancy on Construction of Building Material Projects JSC (CCBM), the National of General Construction Consultants JSC (Nagecco) and Consultant and Inspection Joint Stock Company of construction technology and equipment (CONINCO) possess prime properties as well.

The subsidiary USCO holds land plots in various locations, including Hà Nội and HCM City.

In early 2023, a group of investors recognised the potential of VGV shares when they were priced around VNĐ12,000 per share so began buying. It was a good move, they made significant gains, with the market price tripling.

Eventually, the group sold a portion of their shares to foreign investor Oriental Consultants Global Co Ltd.

Now, VGV is included in SCIC's divestment list, and it is expected to attract substantial investor interest.

FPT is another notable name on SCIC's divestment list. In the first four months of 2024, the company reported revenues of VNĐ19 trillion and pre-tax profit of VNĐ3.4 trillion, marking a 20.6 per cent and 19.7 per cent increase, respectively, compared to the previous year.

In 2020, SCIC announced a public auction of its entire stake in FPT, which exceeded 46 million units, with a starting price of VNĐ49,000 per share. Despite the minimum estimated revenue of over VNĐ2.2 trillion, the auction did not attract buyers.

Currently, the market price of FPT shares has risen 2.7 times compared to the starting price offered by SCIC in 2020, reaching VNĐ134,200 per share. Based on the current market price, SCIC could potentially earn over VNĐ8.5 trillion if it divests its entire capital in FPT. This amount is 3.7 times higher than the minimum expected revenue from the 2020 auction.

Source: VNS