After years of stop-and-go efforts at privatizing its state-owned enterprises, Vietnam's latest push appears set to successfully offload some shares and boost its stock market.
The fresh move came last week as the government ordered its wealth fund, State Capital and Investment Corp. (SCIC) to sell stakes in 10 companies, including Vinamilk, the country's biggest listed company.
Analysts expect the sales to take place next year with the divestments expected to raise more than $3 billion.
"Vinamilk is the one stock that everyone wants to own in Vietnam," Kevin Snowball, CEO of PXP Vietnam Asset Management, said last week. "That will command a premium price."
The government is planning to sell its 45 percent stake in Vinamilk and scrap the foreign-ownership limit on the stock. Vinamilk's long-full 49 percent foreign-ownership limit means foreign investors pay a premium of around 17 percent over what local investors pay to own the shares, Michael Kokalari, an analyst at CIMB, said in a note last week.
While this effort will likely prove popular, the government's previous efforts to exit state-owned enterprises haven't gone swimmingly. That's why the government is turning to selling stakes in already-listed companies to help fund its budget deficits, Snowball said.