Local firms seek alternative investment abroad
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As sources of investment in Vietnam are shrinking, companies such as food producer Kinh Do Joint Stock Company are starting to enter foreign stock exchanges indirectly to find investors.
Tran Le Nguyen, President of Kinh Do Joint Stock (KDC), said if there wasn’t anything “unexpected,” KDC stocks will be listed on a foreign stock exchange this year.
What KDC did and others are starting to follow suit, was to sell its stocks to a foreign investor who will list them on a foreign stock exchange using Global Depositary Receipts (GDRs).
Nguyen said KDC had sold 20 million shares to a foreign investor for this purpose.
As KDC plans to expand and it’s hard to find large amounts of capital at this moment through local stock exchanges or bank loans, Nguyen said finding investment through GDRs was the best way out.
KDC, however, wasn’t the first company to carry this out. Nguyen said his company learned from Hoang Anh Gia Lai Joint Stock Company (HAG), which also listed 24 million GDRs on the London Stock Exchange in March.
This amount is based on the 16.2 million shares HAG sold to Deutsche Bank Trust Company Americas last December for VND72.000 per share as well as 8 million bonus shares.
Besides KDC, Phat Dat Real Estate Company (PDR) also plans to offer 18 million shares to foreign investors in order to enter a foreign stock exchange.
Nguyen said listing through GDRs was a preliminary step for Vietnamese companies before they can directly enter foreign stock exchanges.
President of a stock company agreed. He said local companies now have a great demand for capital, but Vietnamese stock exchanges are too small to attract big foreign investors.
Vietnam is also yet to have a legal framework to regulate listing on foreign stock exchanges, so local companies can’t wait until they can directly mobilize capital abroad.
Experts say GDRs are a merely derivative product and don’t affect directly domestic shares or interests of shareholders right here in Vietnam.
On the other hand, listing on important stock exchanges through GDRs only helps to market Vietnamese companies to foreign investors.
However, not all Vietnamese companies are financially strong enough to follow this route.
