With the average selling price equivalent to the initial price, the State acquired VND1.311 trillion ($57.75 million) from the initial public offering (IPO) of VRG held on February 2, 2018, equaling 21 per cent of the target.

The VRG's IPO attracted only 499 investors

With only 21 per cent of the shares registered to buy, the IPO of Vietnam Rubber Group (VRG) at the Ho Chi Minh City Stock Exchange (HoSE) was the most boring of this year’s “blockbuster” IPOs.

As many as 499 investors registered to buy approximately 101 million VRG shares, equivalent to 21 per cent of the 475.1 million shares put on offer. 34.2 million shares were registered by domestic individuals, 507,200 shares by foreign individuals, 39.4 million shares by domestic organisations, and 26.66 million shares by foreign organisations.

Eventually, 498 investors auctioned successfully with the highest and lowest selling price of VND20,800 and VND13,000 (the initial price). The average selling price was VND13,011, essentially the initial price. State will acquire VND1.311 trillion ($57.75 million), equaling 21 per cent of the plan.

Thereby, this IPO has been the most disappointing in the year so far. Earlier, the three big IPOs of BSR, PV Oil, and PV Power in January were very successful, sell all shares put on offer at high average selling prices.

According to the approved equitisation solution, VRG’s charter capital after equitisation is expected at VND40 trillion ($1.76 billion), equivalent to 4 billion shares. That the state expected to retain 75 per cent of the shares and foreign investors were not welcomed as strategic partners are probably the reasons behind the apathy towards the IPO.

At the auction, Pham Van Thanh, member of the VRG Board of Directors, said the company will register on the unlisted public company market (UPCoM) on April 1. Then, it is expected to be listed on HoSE in June or July this year.

He also informed of VRG’s business outcomes, stating that revenue and profit exceeded the plan by 10 and 30 per cent. VRG’s consolidated revenue hit VND21 trillion ($0.93 billion), and after-tax profit hit VND4.1 trillion ($0.18 billion).

VRG’s IPO fails to bring investors to the yard

The time to register for Vietnam Rubber Group (VRG)’s initial public offering (IPO) is up, but buyers only to buy 21 per cent of the shares on offer.

As many as 499 investors have registered to buy approximately 101 million VRG shares, equivalent to 21 per cent of the 475 million shares put on offer.

At the initial price, the total maximum proceeds that the state could acquire will be VND1.313 trillion ($57.85 million), much lower than the expected VND6.2 trillion ($273 million). Thus, VRG’s IPO is deemed as unsuccessful, despite of the company’s promising advantages, such as its massive land fund and improving profit margin.

The disinterest of investors at VRG’s IPO is in contrast with the two large IPOs earlier this year held by Binh Son Refining and Petrochemical Co., Ltd. (BSR) and PV Oil. PV Power’s record-breaking IPO just yesterday acquired VND6.99 trillion ($307.8 million) with the quantity of ordered share surpassing the offered volume.

Earlier, at the end of 2017, Becamex also staged an unsuccessful divestment where investors only registered to buy 6 per cent of the shares on offer.

According to VRG's approved equitisation plan, the company's post-equitisation charter capital is expected to be VND40 trillion ($1.76 billion), equivalent to 4 billion shares. Thus, VRG is capitalised at VND52 trillion ($2.3 billion), the largest Vietnamese company to be equitised so far.

VRG has a long history and owns the largest rubber land area in Vietnam. Focusing on natural rubber, VRG could expand exploration areas and increase the price of rubber, as well as break into the processed wood sector in order to improve its business results.

Based on the expectated average rubber price increase of 5 per cent in 2018, Bao Viet Securities JSC forecasts the average growth rate of revenue at 13 per cent and that of post-tax profit at 19 per cent for 2018-2022. The price of rubber makes up over 70 per cent of VRG’s profit, so that its fluctuation is a key risk for the company.

VIR