IPO: from Bao Viet to Vietcombank

Vietcombank’s Director General Vu Viet Ngoan asserted that the bank would still make IPO (initial public offering) in August as previously planned when he was asked if Vietcombank would delay its IPO after the Government issued a dispatch, requesting banks and corporations to reconsider the timing for issuing shares.

According to Mr Ngoan, the detailed plan on Vietcombank’s equitisation was submitted to the Government two weeks ago, and he hopes to get the approval prior to July 10. If so, Vietcombank will have one month at least to prepare for presenting itself before the public.

Mr Ngoan has declined to provide the exact figure about the value of the state owned capital in Vietcombank, but he implied that the ownership capital of the bank, estimated at VND11tril, including the value of the convertible bonds now listed at the HCM City Securities Trading Centre (HSTC), would remain unchanged.

Vietcombank will have the bank assessed in accordance with international practice, and the value will help define how much capital the state will hold and how much more will be raised. The principle element of Vietcombank’s equitisation is that it will keep intact the state contributed capital, while issuing more shares to raise funds.

The chartered capital of the bank is currently VND4,300bil (audited financial report 2006). Vietcombank will only register the new chartered capital level after all the shares are issued to the public, including to strategic shareholders.

How much will the chartered capital of Vietcombank be? It remains a secret, but it must not be lower than the current ownership capital of VND11tril.

Last year, Vietcombank gained the post-tax profit of nearly VND2,900bil ($181.25mil), and the bank’s proportion of post-tax profit to chartered capital (VND2,900bil/VND4,300bil) was one of the highest among state owned banks. However, the proportion will considerably decrease after the equitisation, once Vietcombank registers the new chartered capital.

“Our post-tax profit in 2007 is expected to reach VND3-3,200bil, or 10% higher than that of 2006,” said Mr Ngoan. The chartered capital is forecast to increase by 300%, while the profit is to increase by 10% only. However, the capital adequacy ratio will be improved once the bank has much higher chartered capital. Now Vietcombank has the total assets of VND180,000bil ($11.25bil).

Meanwhile, the IPO of Bao Viet held on May 31, 2005 seemed to be not as successful as expected. Many investors have decided to ‘give up the game’ by refusing to pay for the shares they earned the right to buy at the auction.

Nguyen Thi Phuc Lam, Director General of Bao Viet, said that the negotiations with foreign partners could not be conducted yet, as both sides were still waiting for the auction’s average final price (June 26 is the deadline for investors to make payment).


Source: VNE