VietNamNet Bridge – Foreign investment funds have put high hopes on the initial public offerings (IPOs) of SOEs slated for upcoming months. However, the IPOs may have little to offer them.

The VN Index surged by 14.6 percent in the first half of the year, and ranked ninth among the 74 stock indexes watched by Bespoke Investment Group.

Reports all showed that the NAV (net asset value) of foreign investment funds gained strong growth in 2013.

The UK-based LCF Rothschild, a financial institution that keeps watch over the operation of over 100 investment funds around the globe, showed that the average NAV growth rate of 16 foreign funds investing in securities was 28.1 percent in 2013, higher than the VN Index increase of 20.5 percent.

Also according to LCF Rothschild, the DD/P (Diluted Discount/Premium) ratio of the securities investment funds had been -18.6 percent by July 7, 2014, while the figure had been -25.9 percent for five real estate investment funds.

The Vietnam Opportunity Fund (VOF) managed by VinaCapital obtained the high 15 percent NAV growth rate on every stock equity in 2013.

Meanwhile, private equity funds have also reported satisfactory business results.

Mekong Capital, for example, has sold 6.7 percent out of the 32.5 percent of shares it held in The Gioi Di Dong, the biggest mobile phone distribution chain in Vietnam, which brought profits higher by 11 times than the initial investment.

There is no more room for foreign investors in Vinamilk (dairy producer), FPT (technology group), Hau Giang Pharmacy, REE (refrigeration engineering) and Kinh Do Group (sweets manufacturer) because the foreign ownership ratios in the enterprises have hit the ceiling.

Therefore, the foreign cash flow is expected to run into Vietnam Airlines (air carrier), Vinatex (textile and garment) and MobiFone (telecom group) which are going to have IPOs.

Louis Nguyen, CEO of the Saigon Asset Management (SAM), noted that MobiFone shares are the most attractive item. However, the prices and the amount of shares to be offered to the public are still unclear.

What foreign investors want to know most is the MobiFone valuation. The HCM City Securities Company believes that MobiFone is valued at $3.4 billion.

The director of a foreign investment fund management company commented that though it is unclear about the percentage of shares to be offered to the public, it is obvious that investors would have to compete fiercely to obtain MobiFone shares.

Vietnam Airlines’ shares would be on sale at the starting price of VND22,300 per share, but only 3.46 percent of its chartered capital would be offered to the  public. Therefore, the shares are believed not to be an attractive item for foreign funds.

Vinatex shares would be offered to the public at the starting price of VND11,000 per share. However, what makes the shares less attractive is that Vinatex would only list the shares on bourse after three years, which means that investors would have to hold the shares at least for three years after the IPO.

NCDT