Monday, 18 Dec 2017

Vietnam’s government approved divestment plan at Sabeco

Updated at Wednesday, 15 Nov 2017, 18:30
The Hanoitimes - ​The Ministry of Industry & Trade (MoIT) announced the plan to divest the government fund from Sabeco, formally known as Saigon Beer Alcohol Beverage JSC.
The Vietnamese government, which owns 89 percent in Sabeco, aims to complete a stake sale in the country’s biggest brewer Sabeco in December, the trade ministry said, in the clearest signal yet that the long-awaited state divestment might happen this year after repeated delays.
Sabeco, one of the two biggest local brewers in Viet Nam.
Sabeco, one of the two biggest local brewers in Viet Nam.
Sabeco, the country’s second-biggest listed firm by market value, is a key plank of the government’s broader privatization effort, which includes dairy firm Vinamilk, Vietnam Airlines and rival brewer Habeco (known as Hanoi Alcohol Beer Beverage JSC). While the trade ministry did not give details on how much stake in Sabeco would be sold, it said the sale was expected to be worth trillions of dong and would be conducted as a public auction, similar to the Vinamilk stake sale process. As such, the auction is implemented in principle of transparency, clarity and ensure the maximum benefit of the state. The starting price, the size of the sale and how much foreigners are allowed to buy will be announced later, it added.

Vietnam has one of the world’s most attractive beer markets and the biggest in Southeast Asia, thanks to a young population that consumed nearly 4 billion litres in 2016. To tap into this, many foreign brewers from Kirin to Heineken have been looking to invest in Sabeco, the maker of the Bia Saigon and 333 brews, since it was earmarked for privatization.

The government wants to fully divest from Sabeco and smaller brewer Habeco and has been striving to trim stakes in other state-owned enterprises, many of which have low profitability, but the progress has been slow given the small sizes offered, sizeable state control and concerns about vested interests. A spike in Sabeco’s share price due to high demand and a small float has also complicated matters, making it difficult for industry buyers or other investors to step in.

The stock closed at 274,200 dong on Tuesday, nearly 150 percent above its December listing price of 110,000 dong. Sabeco expects its third-quarter net profit to drop 9.5 percent from a year ago. Its profits over January-September rose an estimated 1.64 percent to 3.7 trillion dong ($163 million). 

Previously, in order to speed up the divestment process in the remaining months of 2017, representative of the Ministry of Finance said, the Ministry will recommend the MoIT responsible for divestment of the state fund in two brewers, Saigon Alcohol Beer Beverage JSC (SABECO) and Hanoi Alcohol Beer Beverage JSC (HABECO) to be completed and transferred the state fund to the Support Fund for Enterprise Reorganization and Development before December 1, 2017. In case MoIT cannot announce the prospectus for divestments in the two companies by that deadline, the ministry should seek the Prime Minister’s instruction on handing over the State capital ownership to SCIC. 

The divestment of Sabeco and Habeco, the two biggest local brewers in Viet Nam, has attracted significant attention in the market. MoIT holds 89.59 per cent of Sabeco’s charter capital and is expected to sell 53.59 per cent. In Habeco, the ministry plans to offload its entire holding of 81.79 per cent. Sabeco is the leading beer producer in terms of market share, holding 40 per cent of local beer consumption. Heineken came second, with a 25 per cent market share, followed by Habeco, with 18 per cent.
Nguyen Tung
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