Vietnam on Wednesday announced changes to rules to speed up the privatization of state-owned enterprises (SOEs), adding book building to a program that has been weighed down by the extent of state control and concerns about vested interests.
Privatizations up to now have been handled only by public auction, direct negotiation and underwriting.
Book building has proved a success for private share sales of firms such as Vietjet Aviation , Vietnam’s biggest private airline, and Vincom Retail at its initial public offering, Vietnam’s biggest ever. Both were oversubscribed.
Book building allows companies to identify a range of prices and estimated demand from interested investors to give them a better indication of what IPO price to offer.
“We believe that the regulation … will be a positive catalyst to spearhead the next wave of SOEs’ IPOs in the 2018-2019 period,” top brokerage Saigon Securities Incorp (SSI) said in a note to clients.
State-owned enterprises have so far mostly adopted the public auction method, which together with other restrictions have reduced appetite in even some of the more attractive state assets including dairy firm Vinamilk , Vietnam’s biggest firm by market value.
A public auction of a 9 percent sale in Vinamilk last December was under-subscribed.
Book building is subject to the approval of the prime minister, pending guidance by the finance ministry, and will not be used in a stake sale of Vietnam’s top brewer, Sabeco , expected later this year.
The government also eased restrictions on strategic partners, requiring them to have profitability in two years prior to acquisition, rather than three years, and reduced the lock-in period to three years from five years previously.
The decree, which will be effective from Jan. 1, 2018, also introduces changes to the valuation process and listing requirements.