Mergers, acquisitions boom hits stocks
by Thuy Anh
The stock market has of late seen several listed companies making public purchase offers to become major shareholders in other listed companies.
Seafood firm Hung Vuong Group (HVG) is in the process to acquire additional shares in the basa processing firm AGF to hold a 51 per cent stake in the latter. HVG, with a charter capital of VND600 billion (US$32 million), plans to purchase 3.75 million AGF shares between February 13 and March 20.
HVG chairman Duong Van Minh said his company already owns a 22 per cent stake in AGF, so the increase would help both firms take advantage of each other's expertise for mutual benefit. For example, cold storage facilities of HVG and production facilities of AGF, both of which are running under capacity, can complement each other towards increased efficiency.
Meanwhile, the Sai Gon Fuel Company (FSC) has announced that the Phu Nhuan Jewellery Company (PNJ) would acquire 2.1 million of its shares between March 8 and April 15, or a 26 per cent stake in the fuel business. Currently PNJ has over 1.85 million SFC shares, or around 23 per cent. Reason: PNJ also has a petroleum trading affiliate and the purchase will help expand its distribution network and enable it to enter the real estate business through SFC.
The Viet Nam Century Fund managed by the French group Jaccar recently signed a contract for investing $12 million in the Tra Vinh province-based Mylan Group. The investment – which would fund a new chemical plant, a opto-electronic materials company and several other development plans for Mylan – would give the fund a 30 per cent stake in the group, which has a charter capital of VND80 billion ($4.1 million).
Mylan Group chairman Nguyen Thanh My said Jaccar would assist the group with corporate restructuring and governance, as well as formulating development strategy. He also expects to list the company on the stock exchange in 2011 or 2012.
A recent, big deal outside Viet Nam is also worth mentioning because both parties have business in the country. The UK's life insurance group Prudential bought the US-based AIG life insurer AIA, which mainly operates in Asia, for $35.5 billion.
The busy merger and acquisition activities are happening as anticipated by auditing and consultancy firm PricewaterhouseCoopers in its recently released report on this market. It said a continued growth in M&E activity was expected this year as growing Vietnamese corporations look for targets in which to invest their cash surpluses and facilitate further growth.
It also said many investment funds still have cash available to invest whilst regional and global fund managers would be focussing greater attention on Viet Nam due to its economic performance and prospects.
New low-income housing
Several housing projects that target low-income earners have kicked off construction since early this year but experts say they are not enough to meet the high demand.
Among the projects is the Binh Tri Dong B Apartment Complex in HCM City's District 6 which is invested in by the Hai Thanh and Vinaconex Xuan Mai companies. The project's units, numbering over 350, will be offered at an average price of VND11.6 million (US$610) per square metre.
Vinaconex Xuan Mai also plans to start work on two other low-income housing projects that will have 3,000 apartments in total, one in central Da Nang City and the other in Ha Noi, with prices expected to range between VND8 million and 9 million per square metre.
In Go Vap District, Ha Thuan Hung, an affiliate of Dat Xanh Company, has begun construction of the 14-storey Phu Gia Hung building which will offer more than 240 units for residents on average incomes.
Meanwhile, the Phuc Dat Real Estate Company is developing a low-cost housing project with almost 1,000 apartments in Long Thanh District of southern Dong Nai Province at prices of over VND8 million per square metre. This is one of several such projects in the province.
According to industry insiders, developers have been attracted by the strong demand in this market segment as well as by the fact that investments in low cost housing projects are within their capacity.
"Though these projects are not as profitable as the high-end ones, they can be sold well, that helps quicken the capital circle," said Le Hoang Chau, president of HCM City Real Estate Association. He cited recent sales of projects including E-Home and Lilama SHB 584 as examples.
According to Nguyen Manh Ha, head of the Department of House Management and Real Estate Market Development under the Ministry of Construction, more than 260 low-cost housing projects have been registered to date, which will require almost VND73 trillion to complete the planned 205,000 units. This is not including another 260 projects to build houses for workers.
However, Ha said that only 10 per cent of these projects, 24 to build houses for workers and 31 others for low-income earners, have begun construction.
Meanwhile, Deputy Minister of Construction Nguyen Tran Nam has said around 30 projects for low-income workers will be carried out this year, with Ha Noi and HCM City together offering around 10,000 apartments.
But the supply is still far from meeting demand. It is estimated that around 2.5 million people working in the country's industrial parks and another three million tertiary students are in need of accommodation. These figures exclude employees and other low-income earners in urban areas.
Ha blamed the slow development of these projects on the impact of the economic crisis. Developers were finding it difficult to mobilise advances from low-income customers for their projects, he said.
However, developers of low-income housing projects can hope for an improved outlook this year.
The Ministry of Construction is implementing, on a trial basis, a policy that offers loans of up to 70 per cent of the total project investment at preferential interest rates and repayment periods as long as 15 years.
Japanese ODA primes pump
Last week saw the signing ceremony in Ha Noi for an agreement under which Japan will provide Viet Nam with an additional US$290 million in official development assistance for the second half of the 2009 fiscal year.
"The package will finance five specific projects that are of crucial importance to improving infrastructure in the capital and the Cuu Long (Mekong) Delta region," said Japanese Ambassador Mitsuo Sakaba.
The new ODA would bring the total amount of ODA for the 2009 fiscal year to a record $1.5 billion, the highest for a fiscal year so far, according to Minister of Planning and Investment Vo Hong Phuc.
Beneficiaries will include the Noi Bai International Airport Terminal, Can Tho Bridge and the Hoa Lac High-Tech Zone.
Nguyen Xuan Tien, deputy head for the MPI's Department for Foreign Economic Relations said that ODA amount showed the value Japan placed on its strategic partnership with Viet Nam.
Meanwhile, recently released results of a survey carried out by the Japan External Trade Organisation showed that up to 58 per cent of Japanese companies operating in Viet Nam wish to expand their business, higher than the ASEAN average. The survey's respondents were Japanese firms operating in Malaysia, Indonesia, the Philippines, Singapore, Thailand, Viet Nam and India.
Almost 40 per cent of the respondents selected Viet Nam as the best investment destination.
Up to 64.5 per cent named the country's political and social stability as its best advantage, followed by its market development potential (47.8 per cent) and low labour costs (37.7 per cent).
The respondents, however, also expressed concern about complicated administrative procedures, poor infrastructure and lack of transparency in policy implementation that they felt were the main obstacles to doing business in Viet Nam. — VNS