Vietnam sees first listing of private company
BANGKOK - Vietnam's fast expanding private sector got a boost yesterday as North Kinh Do Foods, a maker of biscuits, cakes and confectionery, became the first company founded by a private entrepreneur to list on the country's tiny stock exchange.
The three year-old confectionery company, which has a factory in northern Hung Yen province, is a de facto subsidiary of Kinh Do Construction and Food, founded by Tran Le Ngyuen, one of a new breed of Vietnamese entrepreneurs profiting from the relaxation of state control over the economy over the past decade.
The listing of North Kinh Do, which had revenues of 210bn dong ($13.3m) and profits of 14.3bn dong in 2003, was hailed as a big step forward for Vietnam's official stock market, and an inspiration for the country's 150,000 registered private businesses.
Vietnam's stock trading centre, which began operations in July 2000, still has only 26 listed companies, all of which were former state enterprises turned into "equitised" companies in which the government retained some holdings.
Both former state enterprises and private companies have been wary of listing on the official exchange, due to executives' discomfort with the market's disclosure rules, and scrutiny of business operations.
But the decision by Mr Tran, who has been previously honoured by the Communist party with a "red star" for his business achievements, could spur others to follow suit.
"It's a great advance that we see a private company that seems to have fully understood what a stock market is for," said Kevin Snowball at the $10m PXP Vietnam Fund. "Hopefully, we will see Kinh Do blazing a trail for other private companies."
Investors, who have been disappointed at the slow pace of new listings over the last several years, are hopeful that the first quarter of 2005 will see a flurry of new listings, including some private commercial banks.
Although Vietnam's ruling Communist authorities began to relax state control over the economy in the early 1990s, they continued to view private businesses with suspicion, forcing many start-up companies to operate in the shadows. But in the past several years, Hanoi has begun embracing entrepreneurs as the new generation of warriors on the economic battlefield.
North Kinh Do, which is 48 per cent owned by its parent, did not raise new capital immediately prior to its listing yesterday, as Vietnam's stock market has yet to authorise any official initial public offerings.
But in April, its parent sold a 15 per cent stake in North Kinh Do to the public, raising about $1m, in the kind of unofficial offering that accounts for the bulk of equity raising in Vietnam.
By Amy Kazmin - The Financial Times - December 16, 2004.
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