The pace of divestment from non-core businesses is speeding up. Notably, the State is taking a profit from selling its stakes, not suffering losses as previously feared.
According to statistical data from 90 State-owned enterprises (SOEs), 42 invested in non-core businesses like securities, insurance, real estate, investment fund and banking with an estimated value of about VND22,405 billion (US$1 billion), and they are required to strip off their remaining stakes.
According to the Steering Committee for Business Renovation and Development, as of December 25, 2014, SOEs divested VND6,076 billion, based on book value, in 233 companies, fetching VND8 trillion, 30 percent higher than face value. Specifically, VND204 billion was collected from securities investment, VND297 billion from insurance, VND185 trillion from real estate, VND1,489 billion from finance and 1,308 billion from banking. Up to VND4,519 billion was taken from companies whose stakes the State does not necessarily control, accounting 56 percent.
Big deals
According to a report released by the Ministry of Planning and Investment at a cabinet meeting in September 2014, SOEs divested VND2,975.8 billion out of a total of VND22 trillion from non-core industries. Under the direction of the Prime Minister, SOEs must complete non-core divestments in 2014 and 2015. However, the current result accounts for just 19 percent. Indeed, to complete this objective, SOEs must double their efforts and determination.
Non-core divestiture was accelerated in the second half of 2014. Many great deals were reached in the last months of 2014. Electricity of Vietnam (EVN) divested nearly VND1 trillion in 2014. Remarkably, in 2014, EVN stripped off its stake in two real estate companies, namely Saigon Vina Real Estate Company and Mien Trung Real Estate Company. EVN planned to sell its 16 percent stake in ABBank, but the Prime Minister assigned this task to the State Bank of Vietnam (SBV). In 2015, EVN’s stake at ABBank will be determined.
EVN also took back VND600 billion from selling its shares in EVN Finance Company. Holding 40 percent of interests in EVN Finance, EVN recently hosted an auction to sell 25 percent of stake, or 62.5 million shares, and it successfully sold 58 million shares. Remaining shares will be sold soon.
Vietnam National Chemical Group (Vinachem) also collected VND233 billion from selling assets in non-core businesses. The proceeds came from the divestiture from Vinachem Finance Company and a securities company.
The Prime Minister requested Vinachem to sell its entire stakes in insurance and securities companies like Bao Minh Securities Corporation (BMI) and Vietnam Industrial & Commercial Securities Corporation (VIG).
In the latter half of 2014, the Vietnam Airlines Corporation successfully divested from Bao Minh Insurance Corporation. The successful divestment from Techcombank and BMI returned nearly VND430 billion to the national flag carrier. Vietnam Airlines plans to sell stakes in eight other companies.
According to the restructuring plan approved by the Prime Minister, Vietnam Airlines will strip off its interests in 10 enterprises, primarily engaged in finance, banking, service, telecommunications and hotel sectors, from 2012 to 2015.
2015, no more delay
Slow divestment was because share prices of many companies fell below the par value while they had to take back original investment value as required. Thus, they tended to sell interests in companies whose share price was above the par value (VND10,000). Many auctions failed to attract investors.
Another reason is non-transparent investment in non-core businesses. Business plans were not reviewed and decided by competent authorities, thus going against the law. So far, leaders of many SOEs endeavoured to delay the process of divestment on fears of responsibility.
However, the results showed that SOEs made a profit from their investment, not losses as feared earlier.
Mr Pham Viet Muon, Deputy Minister of the Office of Government and Deputy Director of the Steering Committee for Business Renovation and Development, said non-core business divestiture is profitable. SOEs invested VND6,050 billion and they took back more than VND8 trillion, representing a margin of 30 percent.
Only divestment from the securities industry fell short of book value when it brought in just 98 percent of original value. Leaders of SOEs all affirmed to complete divestments in 2015, but they also asked for permission to retain certain ratios in non-core business fields, not selling at any cost.
Le Minh
Đăng ký: VietNam News
