Ho Chi Minh City Insurance Corporation (BMI), Vietnam's second-largest insurer, will raise $120 million from issuing more than 32 million shares next month to expand its business, its chief executive said.
CEO Tran Vinh Duc said in a statement the company, also known as Bao Minh, would issue 32,100,000 new shares mostly to existing investors and company employees and also sell to foreign investors.
Proceeds will be used "to add to the working funds, expand the scope of operation and raise Bao Minh's competitive edge", he said in the statement seen on Friday.
Vietnam's insurance sector has grown rapidly in recent years as economic growth has risen beyond 8% in 2005 and 2006. Growth potential in the country of 85 million people is huge as Vietnam spent about $10 per head on insurance in 2005, compared with $46.3 in China, industry reports show.
Bao Minh, which holds 21% of Vietnam's non-life insurance market and stands behind number-one insurer Bao Viet, has planned to raise its registered capital by 74% to 755 billion dong ($46.9 million) this year.
Shares in Bao Minh shed 0.37% on Friday to 134,500 dong ($8.34), valuing the firm at $362 million.
Duc said Bao Minh will sell 17,360,000 shares to existing shareholders under a 10-for-4 plan in July at price of 15,000 dong each. Company employees can register to buy 2.17 million shares by July 6, also at a price of 15,000 dong each.
Bao Minh would sell the remaining 12.57 million shares directly to foreign strategic investors at a maximum price of 130,000 dong each.
All the newly issued shares are expected to be listed by Oct. 1, Duc said.
Bao Minh's first quarter net profit reached 49.3 billion dong ($3 million), nearly half the net earning for the whole of last year, which jumped 18% from 2005 to 100.75 billion dong, Bao Minh said in a financial statement released on Friday.
The company has projected its net profit for the whole of 2007 to rise 9% to 110 billion dong and its Return on Equity is targeted at 18.5% for both this year and 2008, down from 23.2% last year.
Source: Reuters
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