Vietnam Airlines claims long-awaited IPO 'a success'

[HANOI] Vietnam Airlines on Friday said its long-awaited IPO had been "a success", raising more than US$52 million for the national flag carrier, control of which remains firmly in state hands.

After decades of speculation and multiple failed attempts, the IPO went ahead with some 49 million shares - around 3.5 per cent of the company - sold to more than 1,500 investors, the airline said.

The company sold all of the shares offered at an average price of 22,307 dong (US$1.05) a share, it added in a statement, raising more than US$52 million.

The buyers included two corporate investors, the statement said, without giving further details.

In Vietnam an IPO is a separate process from a stock market listing. It is not clear when shares in the airline will actually be traded on the Ho Chi Minh City stock exchange.

"The IPO today is an important landmark," said Pham Viet Thanh, chairman of Vietnam Airlines, in the statement.

The communist state retains a controlling 75 per cent stake in the airline.

A further 20 per cent stake will be sold to strategic partners, while the rest is set aside for airline employees and the trade union.

Analysts say Vietnam Airlines is in a relatively strong position domestically, despite new competition from low-cost VietJet Air, with the country of some 90 million a fast-growing aviation market.

But it will face stiff competition from regional rivals if it seeks to expand long-haul routes.

The IPO is part of a broader drive by Vietnam to clean up its sluggish state sector, long a drag on the country's economy, by equitising - the local term for privatising - hundreds of state-run companies.

Vietnam Airlines' IPO "success" was touted by deputy minister of transport Nguyen Hong Truong as evidence that this privatisation drive "is not that difficult with determination and a logical plan", according to the statement.

Experts have said that while the IPO may bring Vietnam Airlines a little extra cash and potentially some foreign expertise, it is unlikely to bring about a radical transformation in either the company or the state sector more broadly.

AFP