ACBS: Vietcombank Prepares to Sell 6.5% Stake to Mizuho and Other Investors, with a Potential Offer Price of VND 100,000 per Share

In its recently published analysis report, ACB Securities (ACBS) stated that Vietnam Foreign Trade Joint Stock Bank (Vietcombank) is preparing for a private placement of 6.5% of its capital to strategic investor Mizuho and several other investors. The deal is expected to be finalized in the first quarter of 2025.

Previously, in 2019, Vietcombank conducted a similar transaction, with the issuance price at that time equivalent to a trailing twelve-month P/E (pre-money) of 16.0 times and a post-money P/B of 2.8 times.

Based on the valuation of the previous deal, ACBS estimates that the issuance price for this transaction will range from VND 96,000 to VND 100,000 per share.

According to ACBS, the issuance will have positive impacts on Vietcombank’s capital adequacy ratio (CAR) and credit growth potential. Specifically, the analysis team expects Vietcombank’s CAR to improve by approximately 2 percentage points after the issuance. While Vietcombank’s current CAR (as of December 31, 2023: 11.4%) already meets the minimum requirement of 8%, enhancing the capital adequacy ratio will enable the bank to increase its credit provision to the economy while still complying with the more stringent Basel 3 capital standards in the future, as well as creating room for cash dividend payments in the coming years.

However, with a nearly 20% increase in the scale of equity, ACBS believes that Vietcombank will face pressure to maintain its current fairly good profitability. ACBS forecasts that Vietcombank’s ROE will decrease from the current 20% to 15% by 2026, which is equivalent to the industry average.

Regarding this transaction, Vietcombank recently announced that July 19 is the record date for shareholders to attend an extraordinary general meeting (EOGM) in 2024. The meeting is expected to be held on August 19 at the 12th-floor hall of the Vietcombank Building, 198 Tran Quang Khai, Hoan Kiem District, Hanoi.

The agenda of the meeting includes approving the plan for private placement of shares to increase Vietcombank’s charter capital (Capital Increase Plan for 2024), electing additional members to the Board of Directors and Supervisory Board for the term 2023 – 2028, as well as amending certain contents in the Articles of Association, regulations, and other issues within its competence.

The plan to privately offer 6.5% of the shares was first proposed by Vietcombank in 2019 but has not yet been completed. The bank intends to offer 307.6 million shares to Mizuho Bank (46.1 million shares) and other investors (261.4 million shares).

At the 2023 Annual General Meeting of Shareholders, former Chairman of Vietcombank, Pham Quang Dung, stated that the plan for private placement to foreign investors was currently at the stage of hiring consulting organizations. According to the plan, Vietcombank will carry out the private placement for foreign investors in the period of 2023 – 2024.

At the 2024 Annual General Meeting of Shareholders, Board Member Do Viet Hung shared that the implementation of the private placement plan would depend on market conditions.

“Depending on market conditions, the bank will organize a conference to introduce the opportunity to investors and shareholders, both domestic and foreign. We plan to carry out this process in 2024, and the successful issuance of the 6.5% private placement may be completed by 2025,” said Mr. Hung.

Previously, in January 2019, Vietcombank privately issued more than 94.4 million shares (equivalent to 2.55% of capital) to GIC Private Limited (GIC) – Singapore’s sovereign wealth fund, and more than 16.6 million shares (equivalent to 0.4% of capital) to Mizuho Bank (Japan). Through this transaction, the bank raised a total of approximately VND 6,200 billion, equivalent to a price of VND 55,800 per share.

Currently, Vietcombank has two major shareholders: the State Bank of Vietnam, holding over 4.18 billion shares, equivalent to a 74.8% stake, and Mizuho Bank, holding nearly 0.84 billion shares, equivalent to a 15% stake.