11:27 | 21/06/2018 Finance - Banking
(VEN) - Vietnamese firms are facing difficulties in listing on overseas stock markets due to the strict listing criteria set by foreign stock exchanges. Major corporations such as Vinamilk, Hoang Anh Gia Lai, and Saigon Securities Corporation have all put forward plans to list abroad over the past ten years, but none of them have managed to go through with their roadmap due to restrictions in foreign ownership (which have since been lifted), differences in accounting standards, and the global financial crisis.
Vietnamese businesses have hoped that listing shares on foreign stock markets would enable them to raise capital and create development opportunities.
In October 2008, Vinamilk, the nation’s leading dairy producer, received a letter of approval from the Singapore Exchange Ltd (SGX) to list more than 8.76 million shares on the bourse. However, it was forced to abandon the listing plan, reportedly due to regulatory difficulties.
The Hoang Anh Gia Lai Joint Stock Company issued 19 million shares to the Deutsche Bank Trust Company Americas for a listing on the London Stock Exchange in 2010, but that plan, too, did not go through. The Cavico Construction and Infrastructure Investment Joint Stock Company was also unable to carry out its foreign listing proposals due to difficulties related to information disclosure.
VNG, developers of online games, music streaming, and messaging applications, signed a memorandum of understanding with Nasdaq in May 2017 to explore an initial public offering (IPO), a move that could make it the first Southeast Asian firm to be listed overseas.
The agreement, which would see Nasdaq help VNG prepare for the listing, was signed on the sidelines of Prime Minister Nguyen Xuan Phuc’s visit to the US. According to the plan, VNG would take between 18-24 months to complete the procedures for listing and conducting its IPO.
For example, the Nasdaq has four sets of listing requirements. Each company must meet at least one of the four, as well as the main rules for all companies. In addition, to qualify for New York Stock Exchange listing, a company must have at least 400 shareholders who own more than 100 shares of stock, have at least 1.1 million shares of publicly traded stock and have a market value of public shares of at least US$40 million. The stock price must be at least US$4 a share. Initial public offerings, spin-offs from existing companies or affiliates need a market value of at least US$100 million.
Businesses should therefore consider carefully before the listing on foreign stock markets. Listing fees are significant, while requirements on payments, transactions, and information disclosures are strict.
Businesses have to make positive changes to be listed on foreign stock markets.