SOEs urged to shift equitisation model

The model for equitising State-owned enterprises needs to be renewed, says Viet Nam Association of Financial Investors (VAFI) general secretary Nguyen Hoang Hai.

“The Viet Nam Steel Corporation, in its recent initial public offer, went the right way by equitising the entire corporation,” Hai said.

Many other State-owned enterprises, he said, have equitised their member companies first, or only offered minority stakes, approaches which have proven ineffective.

“Proceeds from dividends have mainly flowed back to parent companies,” he said, noting that parent companies then frequently owed more in taxes to the State.

“Many people believe that Viet Nam Steel was not successful in its IPO, but I think it actually was, in the context of sluggish stock market,” Hai added. Shares representing just under 10 per cent of the corporation’s charter capital were offered, with over half being purchased at a share price of VND10,100.

The equitisation would also create more opportunities for the corporation, with greater transparency, improved channels for raising capital and stronger governance, he said.

The corporation carried out the IPO behind schedule due to difficulties in corporate valuation, Viet Nam Steel general director Le Phu Hung told the newspaper Dau tu Chung khoan (Securities Investment).

“Regulations on the equitisation of State-owned enterprises were not finished, and there were many valuation methods applicable to businesses,” Hai said, adding that, in fact, some enterprises had overestimated the value of their assets. The lengthy delays of many equitisation plans had to be blamed on the desire and determination of management. — VNS

Tags: Vietnam companies, Vietnam enterprises, Vietnam SOEs