Firms change capital-raising plans amid bearish sentiment

October, 05/2022 - 09:12
A bearish market has left many firms with no choice but to cancel their capital-raising plan on account of unfavourable market conditions. However, some firms still stayed their course by lowering their offering prices.
A BSC branch. The company has raised nearly VNĐ2.7 trillion from share offerings via private placement. Photo vneconomy.vn

HÀ NỘI — Many firms have begun to change their capital-raising plans amid the recent decline in the stock market, according to experts.

Sao Mai Group Corporation (HOSE: ASM) initially planned to issue roughly 168 million shares to raise over VNĐ2 trillion.

About VNĐ1.6 trillion of the proceeds would be used to add to its operating capital, VNĐ253 billion to invest in An Giang Tourism Development JSC, and VNĐ69 billion to invest in Dong Thap Tourist JSC.

However, the firm later announced the cancellation of the plan on grounds of global uncertainties and unfavourable market conditions.

Louis Capital JSC (HOSE: TGG) followed suit by shelving its plan to issue 54.6 million shares, of which one half was offered to existing shareholders and the other to investors via private placement.

Kien Giang Construction Investment Consultancy Group (HOSE: CKG) did likewise by suspending its registration for the private placement of 13.4 million shares.

Approved in August, CKG's plan aimed to offer the shares, VNĐ15,000 apiece, to professional investors to raise VNĐ201 billion, which would be used for debt settlement and wage payments.

Experts attributed the cancellation of the capital-raising plans to a bearish market, which saw many stocks fall off peaks by between 50 and 70 per cent in prices.

Price drops make the share offerings less attractive to investors, leaving many issuers with no choice but to cancel their plans to avert unsuccessful issuances.

However, some issuers stayed the course by lowering their offering prices amid bearish sentiment.

Development Investment Construction JSC (HOSE: DIG) drew up a new plan to offer 100 million shares at most to its existing shareholders to mobilise VNĐ1.5 trillion for the Long Tân Tourism Urban Project.

Under the plan, DIG new offering price (VNĐ15,000 per share) was set at half the offering price set in late May (VNĐ30,000 per share).

Thu Duc Housing Development Corporation (HOSE: TDH) initially approved the plan to offer 120 million privately-placed shares at a price of VNĐ12,000 apiece in its general meeting early in the year.

However, the firm later adjusted the plan by cutting the offering volume to 58 million shares and the offering price to VNĐ10,000 apiece, down 20 per cent.

The purpose of issuance was changed as well, from financing Đông Trung Residential Project in Bình Dương Province to financing Nhã Đạt Residential Project in Long An Province.

Although share offerings were not so successful for some firms, total capital raised by the channel in the first nine months of 2022 stood at tens of trillions of đồng.

Securities firms and banks took the lead in terms of volume and success rates. Remarkably, NamA Bank, SEABank, VNDirect and SSI managed to raise trillions of đồng through share offerings to existing shareholders.

BIDV Securities JSC (BSC) successfully raised nearly VNĐ2.7 trillion from offering privately-placed shares to its Korean shareholder Hana Securities with a price of VNĐ41,000 apiece, about 37 per cent higher than their market price.

Vietnam Container Shipping JSC said it took them up to 11 months to raise capital via public offerings. In the capital-raising plan in mid-September, it switched to private placement to not "pass up the opportunity to competitors".

Public offerings allow issuers to distribute shares to more than 100 investors. However, this means of issuance sets the bar high on issuers' financial health and incurs a lengthy procedural process. — VNS

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