Investors wait for a boost in the IPO market

A view of Vinpearl Nha Trang. (Photo courtesy of the company)

Hanoi - A new chapter is expected to unfold in Vietnam's financial market, as companies across various sectors gear up for their initial public offerings (IPOs), signalling a notable shift in the country's investment landscape.

Recent developments in the Vietnamese IPO scene have set the stage for a series of high-profile offerings. Notable among these is Vinpearl, a subsidiary of the renowned Vingroup conglomerate, known for its extensive portfolio of hotels, resorts, spas, conference centres, culinary establishments and five-star golf courses across Vietnam.

Vinpearl's board of directors recently approved a filling for a public offering to existing shareholders, a move that brings the real estate giant one step closer to the eagerly anticipated launch of its IPO.

The approved plan outlines the upcoming public offering, expected to take place either in the fourth quarter of 2024 or the first quarter of 2025.

The company aims to issue 70 million shares at a rate of 1,000:40.673. With a price of 71,350 VND per share (2.81 USD), its targeted fundraising goal is over 5 trillion VND, if all the shares are successful distributed to shareholders.

The IPO landscape in Vietnam has weathered a subdued phase following the outbreak of the COVID-19 pandemic, with State-owned enterprises largely absent from the public market limelight.

Instead, private enterprises have taken centre stage, with notable examples such as the recent offering by DNSE Securities JSC, which sought to sell 30 million shares to investors, symbolising the resilience and adaptability of the private sector in challenging times.

As the year 2024 draws to a close, the Vietnamese market is on the brink of an IPO resurgence, with policymakers focusing on enhancing transparency and streamlining administrative procedures to encourage IPO activities that align seamlessly with listing requirements.

Not long after the National Assembly officially approved revisions to nine laws, including the Securities Law, a draft mending Decree 155/2020/ND-CP, which details the implementation of specific provisions of that law, is currently undergoing review by the Ministry of Finance and the State Securities Commission of Vietnam.

The proposal to streamline the listing process from a lengthy 90 days down to just 30 days has ignited optimism among investors, promising enhanced rights protection and potentially serving as a catalyst for more businesses to take the leap into the public market.

By shortening the securities listing process and eliminating unnecessary bureaucratic hurdles, regulatory authorities aim to bolster investor protection and foster a more efficient trading environment within the organised market.

In the draft amendment to Decree 155, a key focus is expanding market access for foreign investors, especially in upgrading the market from frontier to emerging status.

Projections indicate increased foreign investment post-Vietnam's emergence as a new market, yet the challenge remains in identifying specific avenues for foreign capital deployment once the stock market achieves secondary emerging market classification.

As tech becomes a major investment draw, the scarcity of tech stocks in Vietnam's market highlights a diversity weakness. The lack of available stocks in this sector poses challenges for foreign investors seeking to deploy capital efficiently.

According to Nguyen The Minh, director of Analysis at Yuanta Securities Vietnam, once FTSE upgrades Vietnam's market status, its market capitalisation will be compared against peers. Stagnant market capitalisation risks exclusion from the emerging market list.

In Vietnam, the separation of IPOs and listings causes delays for investors, especially foreigners, who must wait months post-purchase before trading. Shortening the gap between IPOs and listings to a month could encourage increased listings.

The evolving landscape of Vietnam's financial market paints a compelling narrative of growth and opportunity for both local and international investors.

As businesses prepare to unlock their value through public offerings, the stage is set for investors to take part in the growth trajectory of dynamic companies poised for expansion and success./.