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VNR raises US$57.7 million through IPO
Nguyen Tung 20:26, 2018/02/02
Vietnam has raised VND1.31 trillion ($57.7 million) from the initial public offering (IPO) of Vietnam Rubber Group (VRG) on Ho Chi Minh Stock Exchange (HOSE) on February 2.
The proceeds were far lower than the state’s expectation of raising at least VND6.2 trillion (US$273.1 million) from the IPO with the participation of 499 investors. Only 110.7 million shares were sold of the 475.1 million shares on offer in the auction for an initial price of VND13,000 (US$0.57) per share. 
 
VRG currently possesses a land fund consisting of 420,000ha of rubber plantation area.
VRG currently possesses a land fund consisting of 420,000ha of rubber plantation area.
After the IPO, VRG is set to sell a further 475 million shares, or 11.88% of its charter capital to strategic investors through private placement, while the remaining nearly 50 million shares (1.24% of the charter capital) will be sold to VRG’s employees and Trade Union members, according to the equitization plan approved by Deputy Prime Minister Vuong Dinh Hue. 

VRG’s IPO was similar in size to that of PetroVietnam Power Corporation (PV Power) conducted in January but the final result was glaringly different. On January 31, Vietnam raised US$308 million (VND6.996 trillion) by selling 20%of PV Power in an IPO. 

Under the approved equitization scheme, VRG’s chartered capital after completing equitization will be VND40 trillion (US$1.76 billion), equaling 4 billion shares. The Ministry of Agriculture & Rural Development (MARD) will be the representative of the State’s holding of 3 billion shares, accounting for 75% of the company’s charter capital. 

Restricting foreign strategic investors, according to experts, is the main reason that made VRG’s IPO less attractive compared to Binh Son Refining and Petrochemical and PVOIL IPOs that raised US$245 million and US$184 million respectively for the Vietnamese government last week. All these IPOs had exceeded government expectations in terms of proceeds, reflecting strong investor interest.

Notably, strategic investors must be domestic companies with a charter capital of at least VND1 trillion (US$44.1 million) and generating profit in the latest 3 years. Moreover, strategic partners will be required to hold VRG’s shares for at least 5 years, with the state having the right of first purchase in case the strategic partners decide to sell afterwards.

VRG currently possesses a land fund consisting of 420,000ha of rubber plantation area (300,000ha in Vietnam, 90,000ha in Cambodia, and 28,000ha in Laos). At the end of June 2017, VRG’s total consolidated asset value was VND72 trillion (US$3.1 billion), including 22.7% of short-term and 77.3% of long-term assets. The rubber firm’s net revenue in the first nine months of 2017 stood at VND354.4 billion ($15.6 million), up 83%year-on-year. The group’s after-tax profit stood at VND708.8 billion ($31.2 million), 2.3 times as much as in the same period in 2016.
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