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Firms bypass bourse to find private buyers for shares

Update: August, 02/2012 - 10:05

HA NOI — With the stock market in the doldrums, private placement of shares is becoming an increasingly encouraging option for strategic partners to invest in public companies, said Military Bank Securities Co deputy director Quach Manh Hao.

Existing small shareholders are generally uninterested in additional share issues, since many listed shares were already trading on the market at below their face value, said Bao Viet Securities Co analyst Tao Minh Duong.

"Therefore, many companies look for strategic partners when they are seeking long-term funding," Duong said.

However, there are a number of regulations that can make private placement less attractive, including a limitation that shares so acquired cannot be transferred for one year. Different placements must also be separated by at least six months.

"However, the problems of private placement do not lie in legal regulations but whether enterprises and their business plans can attract investors," Duong said.

Earlier in May, food processor Masan Group (MSN) announced a plan to issue up to 310 million shares by April of next year. While the sale of 200 million new shares would be used to settle the company's debts, the remaining 110 million shares would be issued to raise new capital and complete acquisitions.

Sacombank Securities Co (SBS) has also planned to issue at least 10 million shares through private placement to strategic partners. Other companies seeking to increase capital through private placement include feed producer Viet Thang (VTF) and construction companies Unicons and Vinas A Luoi Mineral Co (ALV). — VNS

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