The State Capital Investment Corporation (SCIC) announced on November 1 that it aims to sell a 3.33 per cent stake in dairy giant Vinamilk at a starting price of VND150,000 ($6.61) a share.

Expected on November 10, the sale is part of the government’s plans to divest from State-owned enterprises and if successful would reduce State ownership in Vinamilk, Vietnam’s largest listed firm, to 36 per cent; enough to retain veto rights.

The price must not be lower than the starting price or the floor price of Vinamilk shares on the day of the sale, the SCIC said in a statement published on its website. Chairman Nguyen Duc Chi has said the sale could fetch VND6.5 trillion to VND7 trillion ($286.3 million to $308.4 million).

The sale will be absent some of the restrictions applied at last year’s disappointing sale, such as the purchase cap on individual investors, Mr. Chi also said. Last December, the representative of State capital offered 9 per cent of Vinamilk but sold just 5.4 per cent, worth $500 million, to two investors - both units of existing shareholder Fraser and Neave (F&N).

The muddled sales process underscored Vietnam’s relative inexperience and investor wariness about State control as the government seeks to push forward with a major equitization drive; one that has already been hampered due to the small stakes on offer and concerns about vested interests.

Last month, UBS AG Singapore and Saigon Securities Incorporated (SSI) were selected to advise on the sale of the 3.33 per cent sale, replacing Morgan Stanley Asia (Singapore), which along with SSI and VinaCapital Corporate Finance Vietnam advised on the last divestment. 

In the first nine months of this year, Vinamilk saw its revenue rise 10.34 per cent year-on-year to VND38.76 trillion ($1.7 billion), or 76 per cent of the annual plan. Pre-tax profit rose 12.2 per cent to VND10.1 trillion ($444.6 million), while after-tax profit increased 13.6 per cent to VND8.5 trillion ($374.2 million).

The company projects revenue of VND51 trillion ($2.24 billion) this year and net profit of VND9.73 trillion ($428.3 million).

Vinamilk meets much of Vietnam’s daily demand for dairy products, including four-fifths of its condensed milk, which is most often found at the bottom of the country’s famous coffee.

VN Economic Times