Vietnam Airlines IPO Date Set

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HANOI – According to the Vietnamese government, and in line with its state-owned enterprise (SOE) restructuring plans, national carrier Vietnam Airlines is set to list its shares in its first initial public offering (IPO) towards the end of 2013. The move will see the government’s stake in the airline drop to 70 percent, and is expected to raise about US$200 million.

The restructuring will also see the airline divest all of its non-core business investments by 2015 in order to concentrate on aviation and the transportation sector. These investments include holdings in banking, telecommunications and the postal service.

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The restructuring will result in a slimmed down holding company with four airlines including Vietnam Airlines, the Vietnam Airlines Engineering Company (VAECO), Jetstar Pacific and Cambodia Angkor Air. There are currently 26 companies held under the airline’s portfolio.

Vietnam Airlines’ revenues reached US$2.4 billion in 2012, an increase of 6.3 percent compared to 2011. Over the same time, profits increased by 239 percent to US$3.3 million. The airline, which controls about 70 percent of the domestic market, has ambitious targets to generate revenues of US$43.8 billion and pre-tax profits of US$1 billion by 2020.

Citigroup, Morgan Stanley and Vietnamese bankers are expected to advise the airline concerning the IPO. The Vietnam National Textile and Garment Group (Vinatex) and the Vietnam Building Glass and Ceramics Corporation (Viglacera) will hold IPOs this year as well.

Dr. Nguyen Son, the director of the State Securities Commission of Vietnam’s Market Development Department, believes that the IPOs of Vietnam Airlines and Vinatex will create a more attractive market for both domestic and foreign investors.

“The privatization of state-owned groups and corporations will depend on a number of elements, especially market demand… and if the securities market continues to rebound this year, the IPOs of Vietnam Airlines and Vinatex would be attractive investments,” remarked Son.

“It is necessary to work out mechanisms to incorporate shareholders into state-held enterprises…. privatizing these companies will work out to be for the better health of the national economy,” affirmed economist Vu Dinh Anh.

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