Bao Viet avoids holding second auction

Insurance giant Bao Viet, the May 31st IPO of which fell short of expectations, will not have to hold a second share auction since the number of shares purchased in the initial auction has exceeded 70 per cent of the total shares offered, according to Bao Viet chairman Le Quang Binh.
A preliminary calculation, made three days following the June 26 deadline for winning investors to pay for the shares they had won, had indicated that unsold shares were less than 30 per cent of the issue.

Binh announced at that time that, if the proportion of unsold shares was more than 30 per cent, Bao Viet would be forced to conduct a second auction to sell the remaining shares.
Having escaped that fate, Binh said, the corporation would submit to the Ministry of Finance a specific plan for selling the abandoned stake, pursuant to regulations in Circular No 95/2006/TT-BTC dated October 12, 2006.

Under the plan, investors could negotiate to buy the remaining shares at a minimum price of VND73,910 (US$4.59) per share, the average winning price in the IPO.
If the shares fail to sell, Bao Viet would seek the ministry’s permission to adjust its charter capital and the proportion of State holdings.

The next sale would be conducted after Bao Viet has the official results of the initial auction and would not be delayed until foreign strategic partners are selected, Binh noted.
Selection of foreign strategic partners was expected this month, with many foreign financial and insurance institutions having expressed interest in investing in Bao Viet.
The criteria for selection would be partners who can offer high bids and large technical support, Binh said.

"We can lower the price at which shares will be sold for strategic partners if they can commit to give us great technical support," Binh said. "The target of Bao Viet’s equitisation is not only to enhance financial capacity but also improve management skills, technology application and operational experience."

It was likely that Bao Viet would choose only one or two foreign strategic investors, Binh stressed.

Bao Viet has chosen three domestic strategic investors so far: VNPT, which holds 3.25 per cent of shares; Vinashin, which holds 3 per cent; and the Southern Airports Services Co (Sasco), which holds 0.75 per cent.

Source: VNS