VietNamNet Bridge – State-owned enterprises (SOEs) under equitization are turning out to be very attractive in the eyes of private investors.

All 5.93 million shares offered by Ben Thanh Tourist, or 23.73 percent of its chartered capital, sold out at its IPO (initial public offering) on December 9, 2014. The four buyers included two institutional and two individual investors, who paid prices double the starting price.

The travel firm plans to sell another 23.73 percent of shares to strategic shareholders. Two institutional investors have offered to buy the shares, namely Phan Thanh Trade and Service Company and Vietcomreal, a property developer.

The first shareholders’ meeting of Vocarimex, a vegetable oil manufacturer, took place on November 29, with the presence of investors from Kinh Do Group, which successfully bought 24 percent of Vocarimex’s shares at the IPO held in July.

In case of Sasco, the Tan Son Nhat Airport Aviation Service Company, 23.6 percent of the company’s shares, have been sold to the three companies which all have relations to Jonathan Hanh Nguyen, who is believed to be the biggest branded goods distributor in Vietnam.

The equitization of Cienco 4, a transport works company, came up to its expectations with 16.1 million shares sold.

It successfully attracted two strategic investors, including Tuan Loc Investment & Construction, which bought 16.5 percent, and SHB, a commercial bank, in March 2014.

Tuan Loc later bought another 21 million Cienco 4’s shares on December 2, wrapping up the takeover affair at a cost of VND300 billion.

Many big state-owned names have also been taken over by private investors, such as Cienco 1, which has sold 38 percent of stakes to Hassyu Vietnam, Yen Khanh and Fecon. The Central Region Coal Company plans to sell 51 percent of shares to an individual investor and Thang Long Corporation.

Why are SOEs attractive to private investors?

The willingness to buy at high prices shows that private investors view the potential of the SOEs,  which are thought to have “big problems” because of the unreasonable corporate governance mechanism.

The analysts said the common characteristics of the SOEs that were able to successfully sell their shares at IPOs are: 1) they have good brands or great potential for development and 2) the proportion of shares the State accepts to sell to the public is large enough to allow new investors to obtain a controlling stake and have the right to manage enterprises.

“SOEs will be attractive to private investors only if they can manage the enterprises the way they want,” an analyst said.

Huan Tu