Vietnam's Vinamilk says scrapping foreign ownership cap (updated)

Fraser and Neave

16/05/2016 13:43

* Board gives green light to cap removal 
    * No timeframe for lifting cap, state divestment 
    * Vinamilk is Vietnam's biggest firm by market cap 
    * F&N unit has largest foreign stake at 11 pct 
 
 (Recast, adds details throughout) 
    By Mai Nguyen 
    HANOI, May 16 (Reuters) - The board of Vietnamese dairy firm 
Vinamilk  VNM.HM  has decided to remove its 49 percent foreign 
ownership cap, an official said on Monday, paving the way for an 
expected flood of interest from overseas investors in a company 
valued at $7.85 billion.  
    No timeframe has yet been agreed on when the current limit 
will be removed and shareholder voting is not required for it to 
go ahead, Vinamilk investor relations manager Tran Chi Son said. 
    "That's the intention of the board of directors," Son said 
when asked to confirm details of a note about the decision to 
remove the cap sent to shareholders and seen by Reuters. 
    Vinamilk, or Vietnam Dairy Products JSC, has long been the 
country's most sought after firm among foreign investors due to 
its strong prospects and expansion plans. Vinamilk's share value 
has grown 18 times since it first listed in 2006 to 146,000 dong 
($6.54) as of Monday's close. 
    Foreign investors have been frustrated by Vietnam's lack of 
progress towards liberalising equities following a surprise 
announcement last year that it would dismantle foreign ownership 
limits in many sectors, one of the communist country's boldest 
economic reforms yet.  urn:newsml:reuters.com:*:nL3N0ZC2B4 
    "This is the most significant single development in the 
Vietnam market for close to 10 years and we expect a very 
positive reaction," PXP Vietnam Asset Management head Kevin 
Snowball said in a note to clients. 
    Vinamilk earlier this year dropped or adjusted some business 
lines that remain subject to foreign limits in a move analysts 
said was designed to prepare for the share cap removal. 
    The decision to open up Vinamilk is made more significant by 
the planned divestment of the government's 45 percent stake, 
held by the State Capital Investment Corporation (SCIC) and 
worth $3.5 billion. 
    SCIC has given no timeframe for the planned sale. 
    The largest foreign shareholder at present is F&N Dairy 
Investment, part of conglomerate Fraser and Neave  FRNM.SI , 
with 11 percent. The firm is controlled by Thai beer tycoon 
Charoen Sirivadhanabhakdi, who has been making big inroads into 
Vietnam via his conglomerate Thai Charoen Corp. 
    Vinamilk's net income grew 28 percent last year to 7.77 
trillion dong ($348 million). Its first-quarter net profit in 
2016 jumped 38.5 percent from the same period last year. 
    "We are very positive on the performance of the business, 
the earning growth is tremendous," said Andy Ho, managing 
director of VinaCapital, Vietnam's biggest fund and a 
shareholder in Vinamilk. 
    "The key is when will this (lifting of the cap) will happen 
... hopefully very soon." 
   ($1 = 22,330 dong) 
 
 (Additional reporting by My Pham; editing by Martin Petty and 
David Clarke) 
 ((mai.nguyen@thomsonreuters.com; +844 3825 9623; Reuters 
Messaging: mai.nguyen.thomsonreuters.com@reuters.net)) 
 
Keywords: VINAMILK OWNERSHIP/