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Pace of equitisation fails to meet the target

Update: July, 14/2016 - 10:08
The IPO of Mobifone, among the biggest SOEs, is one of the most awaited events in the local market. — Photo

HCM CITY — While the local stock market was waiting for the listing of major State-owned enterprises (SOEs) that were to go public, the Ministry of Finance reported that the pace of equitisation in the first half of 2016 had not reached its target.

Authorised agencies approved the equitisation plans of 39 State-owned enterprises, (SOEs) with a total value of VNĐ27.06 trillion (US$1.2 billion), in the first six months of this year.

State stakes accounted for VNĐ21.63 trillion of the total, according to a report on SOE equitization in the 2011-2015 period, as well as tasks and solutions for the next five years sent by the Ministry of Finance to the Government.

In the first half of 2016, the State received VNĐ4.17 trillion from selling its stakes in SOEs, well above the VNĐ2.09 trillion invested in the sectors, the finance ministry wrote in a report published early this month.

The figure includes VNĐ175 billion from non-core operations in real estate, securities, finance-banking, insurance, and investment fund management sectors, VNĐ1.17 trillion from SOEs in other sectors, and VNĐ2.82 trillion from the State Capital Investment Corp (SCIC).

During 2011-15, SOEs divested a combined VNĐ10.74 trillion from these five non-core sectors in which they earlier invested over VNĐ11.03 trillion (US$494.8 million), the report said.

SCIC withdrew state capital from 368 enterprises and collected more than VNĐ6.9 trillion, 2.4-fold higher than the sum invested earlier, earning a profit of VNĐ4.06 trillion from selling State stakes.

The corporation has taken over State stakes worth VNĐ8.72 trillion in 1,000 companies since its establishment.

Lower than expectations

However, State capital divestments had incorrectly stated their expectations, according to a six month report from the Corporate Finance Department, which also said that shares sold at the initial public offering (IPO) were lower than targeted, while State shares in equitised enterprises remained high.

As an example, State-owned Construction Machinery Corporation offered 5.3 million shares in its IPO today, however, only one per cent of the shares were registered by two investors.

Deputy Director Corporate Finance Department from Ministry of Finance Đặng Quyết Tiến said the speed of equitisations was improved in the second quarter, but it was still not reaching its target.

Tien noted that some of the SOEs’ leaders did not fully understand the contribution of their firms’ restructuring in the economy, adding that fears about their positions after equitisation might add to the problem.

In addition, in some cases, investors who won the IPOs failed to buy the shares because they turned out to not have enough financial capacity for the purchase. The deputy director said that in the future MoF will work with the two exchanges to amend the current regulations of IPOs so that such investors will be treated for their failure to purchase shares after IPOs.

Tien said the new regulations will make all the IPO investors clarify their financial capacity before the auctions of State capital. 

Tiến also said the restructuring of large-scale SOEs, which work in diversified businesses professions, needed complex financial solutions for equitisation, while large investments and improved investments needed additional time to be carried out.

According to the SOE restructuring scheme through 2020, the number of SOEs would be reduced from 1,309 to 17, while corporations holding 100 per cent of state capital would fall to 200.

According to the report, 478 SOEs were equitised, while 80 others underwent restructuring from 2011-15. Additionally, after going public, enterprises saw their chartered capital rise by 72 per cent, total assets by 39 per cent, equity by 60 per cent and pre-tax profits by 49 per cent last year. — VNS


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