Vietnam planning $900 mln Vinamilk stake sale, taps banks-sources (updated)

Fraser and Neave

19/09/2016 09:06

* Govt plans to sell 10 pct stake before divesting rest - 
sources 
    * Govt getting serious about selling prized assets - sources 
    * Vinamilk is Vietnam's largest listed company, worth $9 bln 
 
 (Adds detail on SOE sale process, quotes from sources, 
officials) 
    By Denny Thomas, Anshuman Daga and Mai Nguyen 
    HONG KONG/SINGAPORE/HANOI, Sept 19 (Reuters) - Vietnam has 
invited about half a dozen foreign investment banks to advise it 
on selling its stake in dairy company Vinamilk  VNM.HM , sources 
said, in one of the strongest signs yet of the government 
getting serious about offloading its most lucrative assets. 
    Credit Suisse  CSGN.VX , HSBC  HSBA.L , J.P. Morgan Chase 
 JPM.N , Nomura Holdings  8604.T , and advisory firm Rothschild 
are among the firms that recently received requests from 
Vietnam's government, several sources with direct knowledge of 
the matter told Reuters.  
    The communist government's investment arm, the State Capital 
Investment Corporation (SCIC), holds a 44.7 percent stake in 
Vietnam Diary Products JSC, as Vinamilk is formally known. It 
intends to sell roughly 10 percent, worth about $900 million at 
the current market price and then offload the rest 
incrementally, said the sources who were not authorized to speak 
to the media.  
    Vietnam's steps to deliver on its promise to sell the 
fast-growing dairy producer will be welcomed by investors 
frustrated with a stuttering partial-privatisation drive, missed 
targets, red tape, contradictory signals and allegations of 
vested interests. 
    Though many state-owned enterprises (SOEs) have sold stakes, 
Vietnam has been criticized for dragging out what it calls 
"equitisation" of its more attractive firms, or offering stakes 
that are too small. 
    The first chunk of Vinamilk could be sold at a premium as 
several Asian companies and private equity firms are jostling 
for shares, said the people. 
    Vinamilk said it had no comment as the sale depended on 
SCIC, which declined to comment. JPMorgan, Credit Suisse and 
HSBC declined comment while Nomura and Rothschild had no 
immediate comment. 
         
    SLUGGISH SELLOFF 
    Vinamilk is the country's biggest listed firm with a market 
value of nearly $9 billion. It has grown 21 times in value since 
it listed a decade ago and its shares have gained 28 percent 
this year in anticipation of more shares being available once 
SCIC starts to divest. The company scrapped its 49 percent 
foreign ownership cap in July. 
    Vietnam has also reached out locally to Saigon Securities 
Inc  SSI.HM  and Viet Capital Securities, one source said. 
    Vietnam's government has acknowledged its SOE selloff has 
been problematic but officials argue the process is mired in 
crossover regulations that take time to unravel. 
    Some businessmen say executives are also cautious about 
rushing the process and fear falling foul of strict laws 
carrying jail sentences for causing economic losses to the 
state. 
    Analysts have also said public debt - currently approaching 
65 percent of GDP - is a factor hastening the selloff as Vietnam 
seeks capital to fund much-needed infrastructure projects and 
spiraling social welfare costs. 
    "There are signs that they want to get it done. It is 
probably the easiest to get done among Vietnam deals," one 
person familiar with the matter said. 
    F&N Dairy Investments, backed by Thai beer billionaire 
Charoen Sirivadhanabhakdi, already owns 10.9 percent of 
Vinamilk, and the tycoon is keen to bolster his stake in the 
company, the people said. A spokeswoman at F&N said she had no 
immediate comment. 
    The block being offered does not come with a board seat 
though that could be separately negotiated with by the 
government and the seller shareholders, the people said. F&N 
currently has one seat on Vinamilk's board. 
    Apart from the Vinamilk sale, the government is planning to 
sell its stakes in two state-owned breweries valued by the 
government at $2.2 billion. One, Sabeco, is also on the radar of 
Thai beer magnate Charoen.  urn:newsml:reuters.com:*:nL3N1BD1QP 
    A Vinamilk stake sale is expected this year after Prime 
Minister Nguyen Xuan Phuc ordered SCIC to speed up the process, 
according to the deputy head of the finance ministry's financial 
department for enterprises. 
    "There may be several Vinamilk stake sales rather than a 
one-time sell off," Dang Quyet Tien told reporters last week. 
    "The sale must be carefully calculated to ensure the state's 
benefit, transparency and keeping the stock market stable, which 
is the biggest concern now as our market is small." 
    The Southeast Asia country of 90 million people is one of 
the fastest growing economies in the region and the benchmark 
Vietnam index  .VNI  has risen 13 percent this year. 
 
 (Editing by Lincoln Feast) 
 ((denny.thomas@thomsonreuters.com; +852 2843 6358; Reuters 
Messaging: denny.thomas.thomsonreuters.com@reuters.net)) 
 
Keywords: VIETNAM VINAMILK/