IPOs set for agriculture corporations this year

Vietnam Southern Food Corporation (Vinafood 2), Vietnam Rubber Group (VRG) and Vietnam General Corporation of Agricultural Materials (Vigecam) have completed procedures for initial public offerings (IPO) this year.

The Ministry of Agriculture and Rural Development reported at a conference in Hanoi on February 14 on restructuring of State-owned enterprises in the sector that Vinafood 2 and Vigecam would sell State shares, organize a first general meeting and operate as a joint stock company in quarter two. VRG will take the same steps in the third quarter of this year. 

The Prime Minister approved an equitization plan for Vinafood 2 last year, and the corporation’s value is being checked by State Audit of Vietnam. The corporation is solving financial, land and labor issues in line with the prevailing regulations.

VRG has virtually finalized its corporate value assessment. It is working with the State Audit over the value assessment and improving an equitization plan.

The corporations are looking for strategic investors, heard the conference.

Tran Ngoc Thuan, general director of VRG, said strategic investors of VRG must be financially strong and operate in similar sectors to those of the group. Many companies have been keen to become strategic investors of VRG and the group is selecting the best candidates for submission to the ministry and the Prime Minister for approval.

The ministry is proceeding with plans to assess the value of Vietnam National Coffee Group (Vinacafe) in quarter three and Vietnam Northern Food Corporation (Vinafood 1) in quarter four. 

Pham Quang Hien, head of the ministry’s Enterprise Management, said a dozen enterprises under the ministry went public last year. They included sugar and sugarcane corporations, Vietnam Livestock Corporation, and Vietnam Mechanization, Electrification and Construction Corporation.

Last year, the ministry told enterprises under its umbrella to divest VND1.97 trillion from non-core operations but just over half of the total was realized. All State holdings at other enterprises were sold, meeting 100% of the year’s target of VND489.6 billion. 

The ministry said enterprises subject to equitization had implemented plans as approved and guaranteed State capital. The ministry has successfully divested State capital from large corporations including Vietnam Livestock Corporation.

The ministry acknowledged that the restructuring of some enterprises had slowed and a number of equitized enterprises had failed to sell out shares as expected. Some enterprises have not made full use of the capital raised from their equitization and struggled to solve a flurry of problems such as Vietnam National Tea Corporation.  

Speaking at the conference, general director of Vinafood 2 Huynh The Nang said the corporation had sold all the approved shares at enterprises with good performance and stakes have remained in enterprises with poor performance and finances.  

Vinafood 2 now holds 20% in some enterprises whose shares are priced at VND3,000 per share now, or VND10,000 lower than that at the time it purchased. Therefore, Nang sought a proper mechanism for the corporation to sell the shares.

Nguyen Nam Hai, general director of Vinacafe, said four enterprises under the corporation are unable to sell shares as they run at a loss. It is difficult to ensure State capital in these enterprises after divestments.

“We need guidance of the ministries of agriculture-rural development and finance to deal with the loss-making enterprises,” Hai said.

Despite low rubber prices over the past years, VRG has remained attractive to investors. Deputy Minister of Agriculture and Rural Development Ha Cong Tuan said the group has still been doing fine. Last year, the group obtained profit of more than VND1 trillion, with more than 40% of it coming from its wood business. The profit was also contributed by latex sales, industrial parks and production of rubber products.

Corporations should consider a proper time for divestments to make the most of State capital, Tuan said, referring to the fact that VRG has invested a total of over VND1 trillion in five hydropower projects and is planning to sell them at VND1.4 trillion. 

Thuan of VRG said the group is weighing divestments from the five projects after they generated profits. “Our divestments in the past years have always brought about profits.”