Vincom’s plan to raise D15.4tr ($677.9m) is going to be a landmark, the country's biggest yet. But perhaps more impressive is that the privately-owned company is aiming to take an efficient, investor-friendly approach with the deal.
It will list its stock within two weeks of closing the IPO. Unusually, it is listing its shares ahead of transferring them to investors, but the latter process should only take a few days. This is dazzlingly quick for Vietnam’s domestic stock market, where time all too often appears to be measured in seasons.
A well-organised, mature IPO – how can this fail to influence the raft of privatisations to come? PV Oil, PV Power and Vietnam Rubber Group are all set to follow, but Vietnam is planning over 100 other divestments by 2020. Surely, these deals will learn from the wisdom of the private sector?
Don’t hold your breath.
Vietnam’s government has achieved some frankly shocking delays from IPO to listing. The state held an IPO for Saigon Beer Alcohol and Beverage Corp (Sabeco) in 2008, but its shares were untethered to any exchange until the end of 2016. It was the same story for peer Hanoi Beer Alcohol and Beverage Joint Stock Corp.
The rules make clear that a company must list within one year of its IPO, but what are rules when you have the state behind you? Besides, the fact that the sanction is a mere D150m ($6,603) does little to deter multi-million-dollar conglomerates.
A revamp of the listing process of SOEs is absolutely critical. Vietnamese IPOs have often struggled to win foreign demand, and one reason is that investors are forced to take unwanted market risk while they wait for the IPO shares to be listed. Vietjet at the end of 2016 and VPBank earlier this year were able to execute public offerings, but investors still had at least two months to contend with before they managed to list.
Just a day after starting bookbuilding, Vincom has shown how popular a Vietnamese IPO can be if it has a timetable similar to most developed economies. Its bookrunners sent out a covered book message a few hours after launching the deal on Monday morning.
If Vietnam wants to begin successfully monetising its positions in SOEs then it needs to take note of how Vincom is going about with its listing. With all of Vietnam’s planned divestments — market sources expect at least six or seven state IPOs between now and the first quarter of 2018 — the government has an opportunity to foster growth in the country’s capital markets. It’s time it takes notice.