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Vietnam government to divest $3bn worth of shares in ten firms

Wednesday, October 14, 2015, 11:38 GMT+7
Vietnam government to divest $3bn worth of shares in ten firms
Vinamilk employees milk cows at the company's farm in Nghe An Province, located in north-central Vietnam.

The Vietnamese government will divest all of its shares in ten enterprises, which could earn it a total of US$3 billion, Deputy Prime Minister Vu Van Ninh said in a directive on Tuesday.

The divestment will include major firms such as Vinamilk, Vietnam’s largest dairy producer, giant telecom firm FPT Telecom, and leading insurer Bao Minh.

The government owns the shares via the State Capital Investment Corporation (SCIC), and currently possesses 45.1 percent of Vinamilk, or a stake worth as much as $2.5 billion.

State holdings in the other nine enterprises are estimated to be worth $500 million.

The stake owned by the government in FPT Telecom and Bao Minh are 50.2 percent and 50.7 percent, respectively.

Enterprise

Stake

Vinamilk

45.1 percent

Bao Minh Insurance Corp

50.7 percent

Vietnam National Reinsurance Corporation

40.4 percent

Tien Phong Plastic JSC

37.1 percent

Binh Minh Plastic JSC

38.4 percent

Vietnam Property and Infrastructure JSC

47.6 percent

FPT Corp

6 percent

FPT Telecom

50.2 percent

Ha Giang Mineral Mechanics JSC

46.6 percent

Sa Giang Import Export Co.

49.9 percent

Deputy Prime Minister Ninh’s directive requested that the SCIC choose a suitable time for such divestments to “gain the highest possible benefit,” and report to the government for approval.

The SCIC is also allowed to continue owning a stake in nine enterprises, according to the fiat.

With the divestment decision already made, what remains to be seen is who will acquire these government shares, according to local analysts.

“These shares should be sold to strategic investors, who will bring huge capital to the government, while enabling social enterprises to operate more effectively and professionally,” Nguyen Hoang Hai, from the Vietnam Association of Financial Investors, told Tuoi Tre (Youth) newspaper.

Economist Ngo Tri Long suggested that SCIC carefully select buyers for the shares, and avoid “divesting at all costs.”

“The SCIC should sell the government shares to investors with long-term business plans, rather than speculators who will immediately re-sell the holdings wherever profits are available,” he advised.

Vinamilk is expected to easily find new investors among the ten enterprises, according to analysts.

The company dominates the local market and its value has climbed ten times over the past decade, from $500 million in 2006 to around $5.47 billion now, according to Reuters.

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