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Vietnam aims to raise $4.8 billion selling stake in brewer

[HO CHI MINH CITY] Vietnam is seeking to raise at least US$4.8 billion in the country's biggest stake sale as an offering in a state-run brewer attracts potential bidders including Anheuser-Busch InBev NV and Asahi Group Holdings Ltd.

The government, which owns almost 90 per cent of the Saigon Beer Alcohol Beverage Corp, will offer 53.6 per cent of the brewer in a Dec 18 sale, Truong Thanh Hoai, Industry and Trade Ministry's head of industry department, said at a briefing on Wednesday in Ho Chi Minh City. The initial price has been set at 320,000 dong (S$18.95) a share, he said. That will be about 29 per cent more than the average trading price over the past six months through Tuesday.

Foreign investors are limited to 38.59 per cent in the brewer since 10.4 per cent of stock is already held by shareholders from overseas. The auction has attracted interest from 15 large foreign investors including Asahi and Anheuser-Busch, said Vo Thanh Ha, chairman of Sabeco, as the company is called. The shares will be offered in a single tranche.

Vietnam, whose Communist government has embarked on a plan to divest from some of the country's biggest companies, is attracting attention from investors in its growing market. An expanding middle class and youthful population helped drive a 300 percent surge in beer demand since 2002, according to Euromonitor International, which estimates the market was worth 147.2 trillion dong in 2016.

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The country's biggest brewer had 40.9 per cent share of the market, followed by Heineken NV's 23 per cent and Hanoi Alcohol Beer & Beverage Corp's 18.4 per cent, according to Euromonitor.

Shares of Sabeco surged by the daily limit of 7 per cent on Wednesday and traded 4.7 per cent higher to 335,000 dong as of 1.00 pm in Ho Chi Minh City trading. They have more than doubled since its December 2016 listing on expectations of the stake sale, which the government announced in August last year.  Last month, Vincom Retail JSC's existing investors raised 16.1 trillion dong in what was the country's biggest-ever first-time share sale.

Some investors may not find the price attractive, according to Tyler Cheung, director of institutional clients at ACB Securities JSC.

"The pricing appears a bit expensive for a financial investment and could deter domestic investors," he said. It "could still be attractive to a foreign strategic partner keen on accessing the impressive 40 per cent plus market share Sabeco holds in one of the most attractive beer markets in the world." Asahi is among companies that has said earlier that Sabeco is too expensive. Shares of Sabeco trade at about 41 times blended forward 12-month earnings, according to data compiled by Bloomberg as of Tuesday. Asahi traded at about 19 times, compared with 21 times for Carlsberg A/S and 20 times for Heineken NV.

The government is also divesting stakes in Hanoi Beer Alcohol Beverage as a growing budget deficit forces the leadership to accelerate a plan to cut holdings in state-owned firms. The sale of the brewer known as Habeco is expected to be completed in the first quarter of 2018, Mr Hoai said.