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HÀ NỘI – As many stocks have plunged below their real value, foreign funds are combing Vietnamese shares, raising fears that Vietnamese companies will be acquired by ‘shark’ investors.
Like many markets in the world hit hard by the COVID-19 pandemic, Vietnamese shares have lost about 20 per cent in value this year. Many stocks have seen their price hit historic lows, attracting large investment funds to buy shares in bulk.
General Statistics Office data showed the value of foreign indirect investment, which includes capital contributions and equity purchases, in the first quarter of this year increased to 2,523 transactions worth a total US$2 billion, compared to 1,653 transactions in the same period last year.
The value of capital contribution and share purchases of foreign investors in the first quarter of 2019 reached $5.69 billion but nearly 70 per cent of this value was the conversion of debt into equity of Beerco Limited (ThaiBev’s subsidiary in Hong Kong) to Vietnam Beverage Co Ltd.
The strongest trade occurred in March – the peak of the COVID-19 pandemic in Việt Nam.
Big deals included JPMorgan Vietnam Opportunities Fund transferring 2 million shares of Military Bank (MBB) to Vietnam Growth Stock Income Mother Fund (worth about VNĐ34 billion) and NTAsian Emerging Leaders MasterFund transferring 1.3 million shares of Mobile World Investment Joint Stock Company to Asian Smaller Companies Fund and Vietnam Growth Stock Income Mother Fund. On April 13, Aquila SPC Ltd (related to Dragon Capital) also transferred 420,000 MWG shares to Arisaig Asia Consumer Fund.
The PVI Opportunity Investment Fund (POF) bought 3.9 million shares of Vinaconex Power Development & Construction Investment Joint Stock Company (VCP), raising its holding to 13.9 million shares, or 24.39 per cent.
On April 23, VinaCapital’s fund group acquired 50,000 shares of Phước Hòa Rubber Joint Stock Company, sticker PHR on the Hồ Chí Minh Stock Exchange (HOSE), increasing its ownership to 5 per cent.
According to AFC Vietnam Fund, many stocks on the exchanges are undervalued compared to the corporate value, something rare in developed markets. Therefore, these stocks are very attractive to major investors, including AFC Vietnam.
A representative of VinaCapital Investment Fund said they had a large amount of cash and were seeking investment opportunities when the price is right.
Takeover risk
According to Phan Dũng Khánh, investment director of Maybank Kim Eng Securities, there were opportunities to acquire businesses on the stock market because the stock price was very low. The important thing would be to choose which business at what price and when.
Lê Đạt Chí, deputy head of Business Finance Department of University of Economics HCM City, said the crisis was an opportunity for the acquirers.
“Many stocks have lost 70-80 per cent of their value and there is no reason for companies and investment funds with big money not to buy,” Chí was quoted as saying on the nld.com.vn.
This explained why a number of businesses and members of the board of directors of companies recently registered to buy back shares to not only invest but counter acquisition attempts of rival businesses and investment funds, Chí said.
Preliminary statistics from the stock exchanges showed that as of April 10, members of the boards of directors and internal shareholders of listed companies had registered to buy shares worth up to $750 million, of which they successfully bought shares worth $455 million. Companies have also registered to buy back shares worth up to thousands of billion Vietnamese đồng. — VNS
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