The decisions by VF1 (listed at VSE) in the last few days relating to the pricing of the certificates to be issued in order to raise chartered capital have been facing strong opposition from investors.
On May 2, 2007, Vietnam Fund Management (VFM) unexpectedly announced the adjustment of the price of the fund certificates to be issued to serve the plan on raising chartered capital from VND500bil ($31.25mil) to VND1tril ($62.5mil). The certificate price would be VND23,700/unit instead of VND33,164/unit as announced previously by VFM on March 26.
The decision on adjusting the fund certificate price faced strong protests from investors.
Ngo Minh Duc, an investor, in his letter to Thoi bao Kinh te Vietnam, wrote that as the legal framework was gradually being perfected, creating a fair playing fields for investors, what VFM and the State Securities Commission (SSC) had done (SSC approved the decision to adjust the certificate price) proved to be contrary to what the country was striving for: fairness and transparency.”
The fact that VFM spontaneously adjusted the certificate price caused many investors to suffer, especially the investors who made transactions on and after the ex-dividend day, March 27. According to Mr Duc, every investor who made transactions on the ex-dividend day, suffered the loss of VND4,700 for every fund certificate.
A lot of questions have been raised over the certificate issuance and the guarantee services provided by Bao Viet Securities Company (BVSC). In fact, BVSC can only guarantee the issuance of securities worth 30% of its capital or lower. According to the financial report released by BVSC, the ownership capital of the company is VND421.7bil ($26.35mil), while it has accepted providing the guaranteeing service of the issuance of up to one trillion dong ($62.5mil).
VFM said that it decided to adjust the certificate price in order to ensure the success of the new certificate issuance, which aims to raise its chartered capital. In addition, it said that it had the right to set the certificate price
Nguyen Hoang Hai, Secretary General of the Vietnam Association of Financial Investors (VAFI), said that he had a meeting with Chairman of SSC Vu Bang and Deputy Chairwoman of SSC Vu Thi Kiem Lien to discuss the issue. Mrs Lien said that the spontaneous adjustment of the certificate price was not legal, and promised to reconsider the case.
At 8 pm on May 4, VFM decided to cancel the decision to adjust the certificate price after facing the protest from investors.
VF1 certificate prices declined dramatically due to response from investors.
On May 3, investors had tried to sell out VF1 fund certificates: 2.392mil VF1 were offered for sale, three-fold higher than the offer for purchasing. Though the VF1’s price dropped to the ceiling level, more than 1.8mil VF1 remained unsold.
The sale continuously took place on May 4, while 4mil VF1 certificates could not find buyers. All investors who bought VF1 at VND40-45,000/unit early in March (on March 23, VF1 were traded at VND45,000) have incurred severe losses.
Though VF1 has decided to keep the initially set price at VND33,164/unit, it is too late to help investors who sold VF1 at VND30,700/unit.
Source: VNE
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