Steel giant moves towards public offering

The Viet Nam Steel Corporation (Vnsteel) moved a step closer to its initial public offering (IPO), setting the date for June 10 as part of an ambitious business plan.

The corporation will offer 65.9 million shares, or a 9.7 per cent stake at the auction, with an opening price of VND10,100 (US$0.49). The IPO will be held on the Ha Noi Stock Exchange.

“The IPO will help Vnsteel verify sources of capital, especially from strategic partners,” Vnsteel’s general director Le Phu Hung said.

Hung revealed that foreign corporations, including Nippon Steel, Evraz Group SA, Marubeni Itochu Steel and Novolipetsk Steel, were on Vnsteel’s list of strategic partners. “They will create substantial changes for Vnsteel, especially in corporate governance,” he said.

Vnsteel has a charter capital of VND6.8 trillion ($323.8 million), of which the State holds a 90 per cent stake. After the IPO, the corporation targets an after-tax profit of VND670 billion ($31.9 million) this year, VND882.5 billion ($42 million) in 2012 and nearly VND1.1 trillion in 2013. Vnsteel will invest VND36.9 trillion ($1.8 billion) in 16 steel projects.

“We are the middle of constructing the second phase of the Thai Nguyen steel project which will help increase capacity to 1.5 to 2 million tonnes a year,” Hung said, noting another project in Lao Cai that will produce 500,000 tonnes this year and double that when it is completed in 2012.

Although it wasn’t a good time to raise capital through the equity market, investors were more likely to buy if the price is right. “The price will increase with support from our strategic partners,” Hung said.

We expect the auction to be a success, he added. — VNS

Tags: vietnam stock, Vietnam stock market, VNindex, VNsteel IPO