VietNamNet Bridge – National flag carrier Vietnam Airlines has seen some progress in its much delayed equitisation process with news that the carrier will start preparing the documents for its initial public offering (IPO) during the next two months.

Vietnam Airlines is determined to push up its IPO process and offer stakes to strategic partners.

The Dau tu chung khoan (Securities Investment) newspaper has quoted its sources as saying Vietnam Airlines in April signed an IPO consultancy contract with a joint venture including Morgan Stanley, Citigroup and the two domestic firms BIDV Securities Co and Viet Nam Valuation Finance Consultancy JSC.

The consulting partners are building a plan to assess the carrier's business situation. After the preliminary report, which is projected to be completed by the end of June, the carrier will announce the timetable for pre-IPO work such as a business valuation report, prospectus and other necessary documents, said a source familiar with the deal in the newspaper.

"Vietnam Airlines is determined to push up its IPO process and offer stakes to strategic partners. This is one of the necessary solutions to promote the group's sustainable development," the source said.

The corporation declined to give any details on the IPO when contacted. The equitisation of Vietnam Airlines, leading up to one of the most anticipated IPOs in Viet Nam, started five years ago but missed several deadlines due to unfavourable market conditions.

The Minister of Transport, Dinh La Thang, in March urged the carrier to complete equitisation by the end of this year.

According to market insiders, the latest developments do not guaranteed that the airlines' IPO will be implemented soon because BIDV, one of Viet Nam's four biggest banks, took four years to equitise (from signing the consultancy contract to officially selling shares publicly) in December 2011.

Since the IPO, BIDV has continued to delay its listing on the stock exchange even though regulations clearly call for a public company to list shares within a year of its IPO.

"Only when a strategic investor carries out a review with due diligence will we feel more sure about progress towards Vietnam Airline's IPO," said a director of a financial consultancy company who wished to remain anonymous.

"In addition, though documents for the IPO have been carefully prepared, it will take time for authorities to approve it," he added.

Vietnam Airlines plans to sell 20-30 per cent of its stakes to the public, 10-20 per cent of which will be sold to foreign investors, while the State will retain its holdings from 70-80 per cent.

The carrier expects to collect no less than US$200 million from the IPO.

After being equitised, Vietnam Airlines's equity is estimated to be at about VND14.4 trillion ($680 million), and expected to reach VND21.3 trillion ($1 billion) by 2015.

Source: VNS