Thai tycoon buys 53% stake in Sabeco - Vietnam gradually lose the strong brand?

Mr. Nguyen Quoc Viet, Deputy General Director of AVM Vietnam.

What do you think about the sale of more than 343 million shares at Sabeco recently with the average price of 320,000 VND/share?

I think this deal is quite successful. In particular, we have succeeded in protecting a good price. This is the first state sale to sell such a large proportion. This makes foreign investors accept high prices so that they can control, and have their right to decide. This success is also the experience drawn for later deals; the State can sell large lots to strategic investors, willing to buy at high prices.

Sabeco is considered to have great potential but ultimately only two investors interested. One of the reasons why this "delicious pie" attracted less attention is because investors do not have enough time to learn and consider, sir?

Initially, when organizing road shows, there was a long list of investors interested in buying shares in Sabeco. However, when the Ministry of Industry and Trade launched the price of 320,000 VND/share, many foreign investors felt it was high, far away from their initial expectations, so they did not participate, and only Thai investors were interested. .

In terms of time, I think that investors did have a enough time to learn about Sabeco's activities to determine an acceptable price. Although, the launching bid of the Ministry of Industry and Trade compared with the time of closing price, this did not affect investors’ decisions.

In the Sabeco affair, the Thai billionaire has acquired more than a 50% stake through the domestic companies. Many comments expressed concern, that Thai enterprises will "swallow" Sabeco, with even the risk of transfer pricing occurring in the future. What is your point of view?

On the issue of Thai investors through domestic companies buying Sabeco shares, foreign investors always have a legal entity to carry out the transactions to avoid the risks affecting the whole system as well to be in accordance with legal regulations. It is a technical issue, not to affect the M&A activities in Vietnam. It is important that investors have money to involve.

In fact, sooner or later the investor will take into account the acquisition of the entire business, but the key is to continue selling shares, sell well, not damage. Here, it is a worry that after investors participate in the transfer price make businesses losses, squeeze the Vietnamese side to sell at lower prices as in the case of Coca Cola. I think the Vietnam Government has learned lessons, and will control the transfer pricing. More specifically, the Government will strictly control input costs, and raw material issues. Enterprises cannot push input costs up. In addition, the strategic cooperation contract may have regulations when the capital withdrawal is not sold at lower prices, ensuring the interests of the State. In the specific case of Sabeco, in general, Sabeco investors are listed on the stock exchange. If price moves, stock prices will go down. This is also a factor that foreign investors consider when they intend to implement.

In terms of the overall benefits, if it is tightly controlled, it seems that Vietnam is not losing much when selling the majority of shares of state-owned enterprises to foreign investors. However, it is easy to see that the State collects money, but Vietnam will gradually lose the strong brand. In your opinion, is this issue a concern?

It is a slightly local perspective in the country. In the world, big brands are owned by the private sector. Over a certain period of time, Vietnam has to accept trade, like ODA for economic development. Vietnam needs capital to solve many problems in the country, so it must balance the gain and loss. I think that the Government will have to seriously consider selling or not selling, and selling shares of state-owned companies on the basis of analyzing the gain and loss, then make decision.

The concern is just how domestic investors can be strong enough to enter into deals, retain brand names for Vietnamese instead of foreigners. At present, domestic enterprises still participate in small and medium divestment transactions of the State. Many corporations such as Vingroup, Thanh Thanh Cong, Massan etc., still have the ability to acquire and compete with foreign investors in these deals. However, with great value scale such as Sabeco's business, it is difficult for Vietnamese investors to acquire enough. Foreign investors also have the support of the investment banks behind them, if not, they may have not got enough potential to buy.

Thus, in this story, the important point now is that after selling shares to foreign investors and getting the capital, the State should have mechanisms to build infrastructure, support domestic enterprises to develop strong enough to become companies that can compete at world level. This can be done through facilitating capital, interest rates, start-up support, and more. Such internal development is the only way for Vietnam to retain its brands.

Thank you sir!