JavaScript is off. Please enable to view full site.

Vietnam airport firm IPO rare bright spot in sluggish privatisation drive

Thursday, December 10, 2015, 19:13 GMT+7
Vietnam airport firm IPO rare bright spot in sluggish privatisation drive
Workers leave the new Terminal 2 wing at Noi Bai International Airport in Hanoi on December 20, 2014.

A $1.2 billion airports operator going public in a country with one of the world's fastest growing air travel markets proved an attractive deal for foreign investors, who have largely shunned Vietnam's privatisation drive due to the meagre stakes on offer.

Foreigners snapped up 82 percent of the meagre 3.47 percent stake in the Airports Corporation of Vietnam (ACV) that the government had offered in an initial public offering on Thursday, even though there is no timeframe for a stock market listing.

The sale raised a higher-than-expected $51.6 million, a rare success story for a government that has struggled to bring both local and foreign investors into the state-owned enterprises (SOEs) it wants to make more efficient to reduce a government debt burden that the World Bank estimates will account for just over 60 percent of GDP this year, and 63 percent in 2016.

ACV controls all of Vietnam's major airports, which have seen passenger numbers climb an average 16 percent a year since 2012.

"The main reason for the sluggish sales of stakes is the lack of information available to potential investors, hence there's a lack of trust and much doubt," Dang Quyet Tien, the finance ministry official tasked with revamping the privatisation programme, told Reuters, adding that the government was working on new measures to improve the process.

Official data shows the government has raised only half of the 8.7 trillion dong ($387.2 million) it had targeted from privatisations in 2015 with just less than a month to go before the year ends. Stakes were also sold in 182 firms, just over half of the 289 targeted.

Putting investors off are the SOEs' high debt levels, poor management and the government's insistence on maintaining a controlling stake.

Even strategic investors that the government is courting with a 20 percent stake have stayed away as they know they will have little say in how the business is run, analysts said.

"Success rates have usually been low," said analyst Do Quang Hop of Saigon-Hanoi Securities. "Strategic investors generally want to manage or control the business."

In a bid to speed up the process, privatisation official Tien said the government had ordered SOEs to reduce their debt, sell non-core assets and hold overseas roadshows to attract investors, adding that the government would no longer guarantee loans.

Some lawmakers, however, don't think there is a problem.

"What's the point of rushing?" Tran Du Lich, a member of parliament's economic committee, told Reuters. "The most important goal is to change companies, renew the corporate governance, enhance effectiveness and expand."



Read more




Experience summer sand-boarding in Mui Ne

Sand-boarding, a popular activity amongst local children in the coastal tourism town of Mui Ne in south-central Vietnam, is attracting hundreds of tourists to the Red Sand Dunes

Young maple trees given better protection as Hanoi enters rainy season

The trees are currently growing well, with green leaves and healthy branches.

Hunting skinks for food in southern Vietnam

Skink meat is known to be soft, tasty, and highly nutritious.

Vietnamese-made app allows people to grow real veggies via smartphone

Nguyen Thi Duyen, a young engineer in Hanoi, developed the app and its related services to help busy people create their own veggie gardens.

Chinese tourists hit by Vietnamese over dine and dash

Four Chinese were reportedly injured, with one having a broken arm.

Latest news