Learning to speed-up equitisation

Hanoi (VNA) - The State Securities Commission and Ministry of
Finance are working together to create a new share offering method for State-owned firms during initial public offerings (IPO).

The effort aims to make local IPOs more successful.

Accordingly, firms may be allowed to sell stakes to strategic partners
either before or after the IPO, and the stake's price in these sales is not
dependant on the average winning price usually generated through an IPO.

At present, a firm must conduct an IPO through auctioning, underwriting
and negotiations. However, the share price, set through underwriting and
negotiations, must follow the average winning price. Thus, offerings can
occur only after an IPO.

According to the Ministry of Finance, present IPO regulations have not
helped local firms acquire suitable strategic partners, who can help them
with administrative governance after equitisation.

The equitisation process has therefore been slower than originally
planned.

"Almost all equitised State-owned firms are small and medium-sized
enterprises. Meanwhile, large-scale firms are moving quite slowly through
this process," said the ministry.

"Vietcombank is a typical example. This giant bank has not yet chosen any
foreign strategic partners although its IPO occurred nearly a year ago,"
said independent analyst Nguyen Tien Dung.

Dung also said that the support from strategic partners partially
contributed to the promotion of administrative governance of an equitised
firm, so strategic partners played an important role in equitisation.

"In spite of how well a firm might perform, the share price must be
reasonable for both the seller and buyer to reach consensus. The reasonable
price is reached through discussion not based on any winning price," Dung
added.

A total of 3,786 enterprises in the country have completed the
equitisation process, according to Ministry of Finance data. In the 2008-10
period, the ministry will continue equitising 948 State-owned firms.-Enditem