Vietnam’s govt urged to sell entire stake in dairy giant Vinamilk

However, the sale of minority stakes might largely cut into the actual revenue that the government is supposed to earn by about US$1 billion, Zing News cited the Association of Financial Investors (VAFI) as saying.

Big investors are not interested in buying minority stakes in state-owned enterprises because being minority shareholders prevents them from joining management boards. This means they will not have much say on corporate governance or have enough power to push through reforms to boost efficiency, said the VAFI.

Vinamilk products are displayed for sale at a Fivimart supermarket in Hanoi Vietnam October 7. Photo by Reuters/ Nguyen Huy Kham

“By selling Vinamilk stakes in small pieces at a time, the State may earn US$1 billion less than if it put the whole 45% stake up for sale,” said the VAFI.

The VAFI explained that global investors, including multinational dairy giants, would be more willing to pay a premium to own a 45% in Vinamilk.

“An offer like this would be attractive to investors,” said the VAFI.

The government’s 45% stake in Vinamilk is now valued at about US$4.5 billion on the stock market, and the State Corporation of Investment Capital (SCIC) is about to make the first 9% public offering worth more than US$800 million at the current market price.

The SCIC said it has hired top-tier advisers, led by Morgan Stanley Asia, to help evaluate its options for the sale.

In the government's latest privatization push, it is estimated that the country could rake in more than US$5 billion following share sales in 10 major listed companies with public stakes managed by SCIC, including Vinamilk, IT firm FPT and insurer Bao Minh.

Successful exits from Sabeco and Habeco, which are currently under the control of the Trade Ministry, will add US$2 billion more to the nation’s coffers.