Vietnam Rubber Group to raise US$273 million in February IPO

Thu Jan 4, 2018 - 10:49am UTC
Vietnam Rubber Group, VRG
Vietnam Rubber Group to raise US$273 million in February IPO

Vietnam Rubber Group, VRG

4/1/2018 – State-owned Vietnam Rubber Group (VRG) has announced that it is going for an initial public offering that will be scheduled on the 2nd of February.

Under the deal, VRG will be offering 475.1 million shares, which represents about 11 percent of its charter capital. The shares will be sold at an initial starting price of US$0.59 apiece to raise VND6.2 trillion (about US$273.1 million).

This decision came from its parent company Vietnam Rubber Industry Group (Vinaruco-VRGX) and has gained the approval of Deputy Prime Minister Vuong Dinh Hue.

VRG currently has a charter capital of VND40 trillion (about US$1.76 billion), represented by 4 billion shares. Of this, the government will retain a 75 percent stake.

From the remaining shares, 475 million shares are for public auction, while another 475 million shares will be sold exclusively to domestic strategic partners. Nearly 49 million shares will be sold to current employees and 0.02 percent to members of VRG’s trade union.

In fact, VRG’s IPO will be similar in size to that of PetroVietnam Power Corporation (PV Power) which will be conducted later this month.

The Ministry of Agriculture and Rural Development (MARD) will act as the state’s representative in the sale. For this IPO, the company will only be selling their shares to domestic investors and not foreign investors.

“There are a few reasons not to sell VRG’s shares to foreign investors, but the main reason is because of important position of land that this group holds,” Deputy Minister of Vietnam’s Agriculture and Rural Development Ha Cong Tuan said.

To ensure that investors will commit to attaching long-term interests to the company even after equitization, the deal also includes a condition of not transferring shares for 5 years.

Earlier in November 2017, Vietnam’s government approved VRG’s five-year production and business plan for 2016-2020. The company targets achieving an average annual growth of 18 percent during the period. With total revenue surpassing VND40 trillion (US$1.76 billion) and profit of around VND 9 trillion (about US$409 million) by 2020.

The Vietnam Rubber Group was initially established in an effort to restructure the Vietnam General Rubber Corporation. The company takes a multi-sector investment strategy, focusing on hydropower, cement, construction, as well as the banking sectors.

This news is published on Reuters.

Vivian Foo is a reporter who writes about Southeast Asia’s technology and startup space. The entry point which led her to write about the startup ecosystem was her fascination of the dot-com boom. She is taking a deep dive into how the entrepreneurial mindset works and hopes to share the insights, innovation, and stories of the startups with her readers.