Vietcombank to sell shares to Singaporean investment fund
Singapore government’s investment fund GIC Private Limited (GIC) is negotiating to buy at least 7% of the Joint Stock Commercial Bank for Foreign Trade of Vietnam (Vietcombank).
That would be the second largest investment that the Singaporean sovereign fund has made this year in Vietnam.
A successful deal would show investors’ high confidence in Vietnam’s banking sector, which has been badly affected by bad debts.
Vietcombank has been planning to issue 360 million new shares, equivalent to 10% of the bank’s existing stocks to foreign investors in a private placement.
The total value of the share issuance is US$600 million based on the bank’s current market value.
The stake sale to GIC could be at a lower price than the bank’s share price, according to Singaporean media reports. Vietcombank will have to submit details of the deal to its biggest shareholder, the State Bank of Vietnam (SBV), for approval.
A successful deal would make GIC the third largest shareholder after the central bank, which holds 77% of capital, and the Japan-based Mizuho Bank, which holds 15%.
In the first half of 2016, Vietcombank recorded a pre-tax profit of VND4.27 trillion (US$189.8 million), an increase of 35% over last year, and reduced its bad debt ratio to 1.74% from 1.84%.
The SBV on August 2 approved Vietcombank’s proposal to increase charter capital by over VND9.3 trillion (US$416.38 million) to VND35.977 trillion.
After completing procedures related to the capital rise in accordance with the current legal regulations, Vietcombank will have to submit documents to the SBV, asking for a change in charter capital in its operation licence.
The added capital will come from the issuance of 933 million bonus shares at the rate of 35% for the existing shareholders of the bank.
After raising the charter capital, the dominant share of the State would reduce from 77% to 70%.
Vietcombank said it aims to be not only the No 1 bank in Vietnam, but also placed in the top 300 financial banks with the best management in the world by 2020.
