VietNamNet Bridge - The initial public offering (IPO) of Vissan, a foodstuff processor, shows stiff competition in the Vietnamese distribution market.

Vissan’s IPO has been described as successful with its shares sold at VND80,053 per share.

The company would still attract the public’s attention in the time to come as it plans a share auction specifically for the shareholders registering to become its strategic investors.

South Korean CJ Group, which has 3.3 million Vissan shares, or 4.7 percent of the company’s charter capital, Anco and Proconco all have registered to buy 14 percent of shares Vissan offers to strategic partner. 

If CJ pays high as it did at the IPO, analysts said, it would win the auction and obtain 18 percent of Vissan’s stake.

A securities broker said he can see high possibility of CJ hunting for the 7 percent of stake Vissan issues to its workers at preferential prices. Under the current regulations, workers in equitized enterprises can buy shares at prices equal to 60 percent of IPO prices, or VND48,032 per share in this case. 

The price is just equal to 47 percent of the price level of VND102,000 per share CJ paid at the IPO. Therefore, the broker said, it is highly possible that CJ would try to collect the shares being held by workers. 

The initial public offering (IPO) of Vissan, a foodstuff processor, shows stiff competition in the Vietnamese distribution market.

CJ and any other strategic shareholder would not want to stay second to the biggest shareholder – the state. They hope the state would continue divesting shares like it did with Vinamilk and some other big enterprises.

However, analysts say this is just the tip of the iceberg, while there are some other reasons to explain why foreign investors want Vissan shares.

Policy makers and the members of the Vietnamese delegation negotiating for Vietnam joining to WTO may understand why foreign investors are willing to pay high for the stake of the Vietnamese enterprises which possess large distribution networks with sale points reaching out to rural and remote areas.

With 90 million consumers, the potential consumption of goods, especially essential goods, is great. And the most effective way to boost sales is to control distribution channels.

However, under WTO commitments, Vietnam does not accept, or accepts with limitations, the foreign investors’ participation in the distribution of some products, including rice, pork and farm produce.

In the meat market, the chicken and beef market segments have been flooded with the imports. Only the pork market segment is controlled by Vietnamese enterprises, of which Vissan is the best known name. 

The company provides 20 percent of the total pork demand in HCM City daily. It also serves as the only tool for city authorities to intervene in the market to stabilize the provinces. 


TBKTSG