VietNamNet Bridge - Why are some international finance players listing shares on foreign markets and why are they choosing London?

Despite the concern that Brexit would rock the international finance market, some foreign investment funds in Vietnam have decided to list shares on the London Stock Exchange (LSE).

VEIL (Vietnam Enterprise Investments Ltd) has listed its shares on the stock exchange since early July. Prior to that, in March, VinaCapital listed VOF (Vietnam Opportunity Fund) shares on LSE after 12 years of listing on Alternative Investment Market.

According to VinaCapital, in order to be eligible for listing there, VOF needs to satisfy strict requirements of growth, operational efficiency, management quality and technical criteria. Regarding the scale, the fund must have minimum capital of $250 million. 

At the moment of listing, the net asset value (NAV) of VOF was $700 million.

In fact, the VOF’s listing at LSE is predictable, because it had been listed on the alternative market for a long time. 

As for VEIL, to pave the way for the listing, in late 2015, VEIL merged with VGF, also a fund managed by Dragon Capital. The move raiseed the total asset value to $800 million.

Despite the concern that Brexit would rock the international finance market, some foreign investment funds in Vietnam have decided to list shares on the London Stock Exchange (LSE).

“The large scale of the fund helped attract investors,” said Vu Huu Dien, the investment director of Dragon Capital which manages VEIL.

VEIL met hurdles on the way to LSE and it had to cut its ownership ratio in Vinamilk, a Vietnamese dairy producer, to satisfy the requirement on no more than 20 percent of NAV of one share.

As such, two closed-end funds, among the largest and longest-lasting ones in Vietnam, have completed the listing on London stock market.

Why London? London, together with New York, is one of the oldest financial centers in the world.

Dien from Dragon Capital explained that many of its clients are in the UK and Europe. Meanwhile, the US stock market is diversified with too many stocks listed there, which may make shares of funds investing in Vietnam unattractive to investors.

“The listing will help international investors better access information about funds in Vietnam,” Dien said.

The listing will also help more easily mobilize capital to enlarge funds’ scale. However, for Dragon Capital, increasing capital for VEIL is not the priority task now.

What Dragon Capital hopes is that the listing in London will give more opportunities to international investors to access the fund’s shares. Many financial institutions won’t invest in unlisted shares or shares listed on OTC market.

The aim of the listing, in the immediate time, is creating transparency and high liquidity for shares, and then, narrowing the discount rate, which measures the gap between the fund certificate/share price and NAV. 


NCDT