BizLIVE - This has been the most disappointing IPO since the start of this year, in contrast to those of energy companies.
Vietnam Rubber Group Raises Lower-than-Expected $57.7 Million from IPO
Workers are seen harvesting rubber latex. Photo:
State-owned Vietnam Rubber Group (VRG) raised 1.31 trillion dong ($57.7 million) from an initial public offering (IPO) on February 2, much below than the targeted proceeds of $272 million, exchange data showed.
Nearly 500 investors bought a total of 100.76 million shares, just 21.2% of the amount on offer, at an average price of 13,011 dong each, which was slightly higher than the initial price of 13,000 dong.
Foreign investors acquired 27.16 million shares, equivalent to a 0.68% stake in the group, the largest rubber planter in the country.
This has been the most disappointing IPO since the start of this year. Binh Son Refinery and Petrochemical Co., PV Power and PV Oil, all wholly-owned subsidiaries of energy giant PetroVietnam, booked higher-than-expected proceeds from their respective oversubscribed IPOs last month.
According to a government-approved plan, VRG will have a registered capital of 40 trillion dong ($1.76 billion) post-IPO. The government will sell a 25% stake, including 11.25% to strategic investors who can be only Vietnamese.
At a press meeting late in December, Deputy Minister of Agriculture Ha Cong Tuan said that foreign investors are not allowed to buy strategic shares of VRG because the group is managing over 300,000 hectares of land in Vietnam, many of which are crucial to national defense and security or located at prime sites in major cities.
This restriction to overseas investors was attributed to their lukewarm interest and the underperforming IPO.
A board member said at the IPO that VRG plans to float its shares on the Unlisted Public Company Market (UPCoM) in April and list on the Ho Chi Minh Stock Exchange in June or July.
VRG posted a net profit of 4.1 trillion dong ($180.6 million) on revenue of 21 trillion dong last year, both beating yearly estimates. Its total assets stood at 73 trillion dong ($3.2 billion) at end-2017.