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Cash-rich Vietnamese realty firm wants to dip toe in logistics water

Cash-rich Vietnamese realty firm wants to dip toe in logistics water

Wednesday, June 10, 2015, 15:53 GMT+7

Vietnam's leading realty developer Vingroup wants to be a strategic shareholder of the state-owned Saigon Port by acquiring the largest part of its total shares issued for the public by the end of this month.

The Saigon Port, the biggest in the country, is expected to launch its initial public offering (IPO) by the end of June with a 16.5 percent stake, or 35.7 million shares, available for purchasing at a starting price of VND11,500 (US$0.53), according to the Ho Chi Minh Stock Exchange (HoSE), where the IPO is due to take place.

There are three strategic investors subscribing with bids worth 102 percent of the total shares to be offered for sale after the IPO, including Vingroup with 28.56 million shares (80 percent) and two banks - VP Bank and VietinBank with 3.93 million (11 percent) each.

With a chartered capital of VND2.162 trillion ($99.45 million), after the IPO the state will continue to hold 138.4 million shares (64 percent), followed by strategic investors and the public with 35.7 million shares each (16.5  percent), and the remaining 2.98 percent shares for the port’s employees and their union.

Particularly for the shares sold to strategic investors, the Saigon Port said the sale will be carried out after a public auction at a price that will not be lower than the average auction price, according to the HoSE.

With plenty of cash to spare, Vingroup, one of the biggest Vietnamese realty developers, showed its interest in tapping into the port service after investing in many other fields like electronic retailing and agriculture.

By the end of last year Vingroup, capitalized at VND71.5 trillion ($3.3 billion) on the HoSE, had deposited VND9.22 trillion ($424 million) in cash at local banks, up 147 percent year on year, according to the firm’s Q4/2014 financial report.

In April a Vingroup representative, Tran Thanh Son, said the firm wanted to invest in railways, with a plan to buy the three largest stations in Vietnam, including Hanoi, Saigon and Da Nang, at a meeting on implementing the public private partnership in railway infrastructure in Hanoi.

Vingroup is eager to invest in railways for tourism development, but the country must have quality trains meeting European standards to cut the travel time to less than five hours and attract more passengers, Son said at the event.

One month earlier, Vingroup entered the consumer electronics retailing sector with the introduction of the brand VinPro. 

The technology and consumer electronics chain is now located at Vincom shopping centers run by Vingroup in major cities across the country, including Hanoi and Ho Chi Minh City.

Meanwhile VinPro+, offering the same kinds of products including high-tech gadgets like smartphones, tablets, laptops, electrical appliances and other accessories, has begun filling the places where Vincom is still absent in many other provinces and cities nationwide.

Also in March, Vingroup sought permission from the authorities in the northern province of Quang Ninh to set up large-scale farms for vegetables, fruits, and other agricultural products.

Vingroup, about 30 percent of which is owned by Pham Nhat Vuong, the richest man in Vietnam with a net worth which Forbes said tops $1.7 billion, had long planned to penetrate the new sector.

In a press briefing after the 2015 Lunar New Year in February, Vuong, chairman of Vingroup, said that after working with agricultural experts from Israel, he found that it is worthwhile to pour money into agriculture.

The group already owns several dozen hectares of agricultural land to realize Vuong’s dream.

The financial report by the Saigon Port last year showed a net revenue of VND1.073 trillion ($493.6 million) and after-tax profit of VND65.4 billion ($3 million), an increase of 100 percent and 72 percent, respectively, compared to 2013.

In 2015, the Saigon Port has targeted to earn VND943.7 billion ($434.1 million) in net revenue and VND31.2 billion ($1.43 million) in after-tax profit, down 12 percent and 52 percent year on year, respectively.

The Saigon Port is a subsidiary of the Vietnam National Shipping Lines (Vinalines), which manages four terminals in District 4 and District 7 in Ho Chi Minh City, including the Nha Rong Port, Tan Thuan Port, and Tan Thuan 2 Port.

The Saigon Port also participates in joint venture ports like SSIT (34 percent), SP-PSA (36 percent), and CMIT (15 percent).

It is currently in the process of building the Saigon-Hiep Phuoc Port with a total investment of nearly VND2.8 trillion ($128.8 million).

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