Vietnam listed infrastructure developer targets funding from US pension, insurance funds

Its board of directors has consulted shareholders on a proposal enabling foreign investors to purchase up to 100 percent in the firm

This file photo shows a driver paying fees at a toll station in Ho Chi Minh City.

The Ho Chi Minh City Infrastructure Investment JSC (CII) has planned to tap into U.S. pension and insurance funds for additional financial resources it needs for future development, local media reported.

The plan was unveiled by the firm’s board of directors during a meeting of CII shareholders on Tuesday, according news website Nhip Cau Dau Tu (Vietnam Investment Bridge).

It is part of a proposal enabling foreign investors to purchase up to 100 percent of the firm that the CII board of directors wanted to consult shareholders on.

Regarding shareholders’ concerns about the possibility of a foreign takeover of CII if foreign investors are allowed to buy a 100 percent stake, Le Quoc Binh, CEO of the firm, said there is no such concept of acquisition in the field of infrastructure, Nhip Cau Dau Tu reported.

With further participation of foreign investors in CII, the company will acquire larger amounts of capital, more expertise in management, and better likelihood of raising funds from international financial institutions, Binh said.

The more engagement of large foreign shareholders, especially those from U.S. investment funds, in CII, the better, the executive added.

Despite the support of Goldman Sachs Group, which is a strategic shareholder of CII, the company still cannot mobilize capital from U.S. funds, especially pension and insurance ones, most of which have abundant resources, Nhip Cau Dau Tu quoted Binh as saying.

He added that it would cost around 1.5-2 percent per year to raise capital from these funds.

The cost of borrowing U.S. dollars in Vietnam is currently at 3-6.7 percent per annum.

The problem is how to make the funds trust CII and act as its intermediaries, Binh said.

Therefore, the expansion of room for foreign investors will create huge opportunities for the firm in accessing foreign capital markets, he said.

A rise of only a few percent will not be attractive enough to foreign investors, but it would be different if the foreign sector is permitted to own a 10 or 20 percent stake in CII.

CII expects profit in 2016 to reach VND847 billion ($38.1 million) and top VND1 trillion ($45 million) by 2017.

The Ho Chi Minh City Infrastructure Investment JSC, founded in 2001 in Ho Chi Minh City, engages in constructional investment, exploitation, and trading of urban infrastructure in build-operate-transfer and build-transfer projects across the country, according to Bloomberg.

A decree on scrapping a 49 percent foreign ownership cap across many listed firms, which was signed by Vietnam's Prime Minister Nguyen Tan Dung in July, took effect last month.

According to the decree, 49 percent caps would still apply to areas where ‘conditions’ were placed on foreign investments, except for sectors governed by separate ownership regulations, such as banking, where total foreign stakes are limited to 30 percent, Reuters reported.

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