Vinamilk share sale sees F&N lift stake but fails to attract other buyers (updated)

Fraser and Neave

12/12/2016 10:49

* F&N to buy 5.4 pct for $500 mln, stake to rise to 16.35 
pct 
    * But no other buyers came forward in 9 pct share sale 
    * Vinamilk one of Vietnam's most attractive assets 
    * Investors put off by cap of 2.7 pct for each investor 
    * Sell-off in Vietnamese shares also hurt sentiment 
 
 (Recasts with confirmation of the sale) 
    By Mai Nguyen 
    HANOI, Dec 12 (Reuters) - Singapore-listed Fraser and Neave 
Ltd  FRNM.SI  is set to boost its stake in Vietnam's Vinamilk 
 VNM.HM  but the sale of shares in one of the state's most 
attractive assets failed to draw in other buyers after highly 
restrictive investment caps were imposed. 
    The State Capital Investment Corporation (SCIC), which 
represents the government's 44.7 percent ownership in Vinamilk, 
took the market by surprise last month when it announced each  
investor could only buy up to 2.7 percent of Vinamilk's shares. 
    Those sudden restrictions as well as unfavourable market 
conditions saw only two bids lodged for the 9 percent of 
Vinamilk on offer - both from wholly owned units of Fraser and 
Neave (F&N). 
    The food and beverage firm, already Vinamilk's second 
biggest shareholder and backed by Thai tycoon Charoen 
Sirivadhanabhakdi, will buy an additional 5.4 percent of 
Vinamilk for $500 million to take its holding to just over 16 
percent. 
    But other investors stayed away - also put off by a drop in 
Vinamilk's share price below the 144,000 dong minimum set by the 
government. The stock has been hit by a sell off in Vietnamese 
shares as investors shun emerging markets amid uncertainties 
after the U.S. presidential election and a potential rates hike 
by the Federal Reserve. 
    "The minimum bidding price of 144,000 dong is actually not 
expensive for a strategic investor in Vinamilk, but the issues 
are the timing and the restrictions that come with it," said 
Nguyen Thanh Lam, deputy manager at Maybank Kim Eng Securities 
in Vietnam. 
    The SCIC, however, said it was pleased with the sale. F&N 
paid a $36 million premium to Monday's closing price. 
    "Given the vulnerable stock markets in Southeast Asia and 
Vietnam, Vinamilk's share disposal transaction by the SCIC can 
be seen as a success," it said in a statement. 
    F&N did not immediately respond to requests for comment. 
    Vinamilk, Vietnam's top listed firm by market value, is seen 
as one of the country's most attractive companies as it commands 
around half of domestic market for dairy goods and has seen 
steady earnings growth. Its shares have jumped 20 times in value 
since its debut on the Ho Chi Minh bourse 10 years ago.     
    Other closely watched offerings coming up include the sale 
of government shares in Vietnam's top brewers Sabeco and Habeco. 
The government owns nearly 90 percent of Sabeco and is keen 
unload its entire stake by 2017. 
    That sale process is slated to kick off in April, the Wall 
Street Journal reported on Monday citing people familiar with 
the matter, adding that at least 40 percent of the company -  
worth nearly $2 billion at current market prices - would be on 
offer. 
    Privately owned budget carrier Vietjet is also due to sell 
shares later this year.  
    Fiachra Mac Cana, managing director and head of research at 
Ho Chi Minh Securities, said the Vinamilk share sale did not 
necessarily bode ill for other asset sales. 
    "I feel that the sale is actually a good initial step with a 
few lessons learned as to how to do better next time," he said.  
    "In any event, the government hasn't been doing this for 
that long so in a way we should expect them to be learning as 
they go." 
    ($1 = 22,585 dong) 
 
 (Reporting by Mai Nguyen; Additional reporting by Saeed Azhar; 
Editing by Edwina Gibbs) 
 ((mai.nguyen@thomsonreuters.com; +844 3825 9623; Reuters 
Messaging: mai.nguyen.thomsonreuters.com@reuters.net)) 
 
Keywords: VINAMILK SALE/