Who would buy Vietnam’s state-owned stakes – when Hanoi is ready to sell?

[HO CHI MINH CITY] After decades of stop-start progress, Vietnam is renewing its drive to accelerate privatisation and divestment of its state-owned enterprises (SOEs).

These include some of its largest assets, from oil and telecommunications to airports and banks. 

This move is part of Hanoi’s broader bet that deeper state capital restructuring and a strengthened stock market can fuel the nation’s ambitious double-digit economic growth agenda. 

“For many state-owned assets, the privatisation has been way too slow... Many assets have also been totally stuck,” said Christopher Beselin, chief investment officer and founding partner at Endurance Capital.

The Ho Chi Minh City-based investment firm is focused on listed South-east Asian companies.

Yet, he noted that Vietnam is now articulating a clearer ambition to elevate the role of the private sector in the economy, alongside a renewed push for more participation from other stakeholders to professionally govern SOEs and partially state-owned entities.

These mark a notable shift in tone from earlier cycles.

“If these companies could be properly managed, or... state ownership in listed firms (could be sold down) further, there is significant untapped value there,” he added.

Such efforts also come at a critical time, with Vietnam securing an upgrade to secondary emerging market status later this year from index provider FTSE Russell.

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The milestone is expected to pull billions of dollars of active and passive capital into the country’s stock market.

Hanoi has also repositioned SOEs towards more focused strategic sectors, greater operational efficiency and stronger market discipline, as well as continued restructuring of state capital, including divestments and reallocation away from non-core areas.

These were outlined in a landmark Politburo directive known as Resolution 79, issued in January this year alongside four key resolutions that together form a broader reform agenda to propel the country to high-income status by 2045.

On Tuesday (May 19), government leaders met with 23 of the largest state-owned groups to discuss criteria for classifying SOEs undergoing capital restructuring.

However, whether these major SOEs can meaningfully reduce state ownership – and whether investors are willing to absorb the supply at scale – still remains less certain. 

Regulatory push risks stalling in limbo 

SOEs account for roughly 29 per cent of Vietnam’s gross domestic product and play an outsized role in critical industries.

Yet, their progress in reform and divestment has consistently lagged behind targets.

From 2016 to 2020, only 39 of the 180 SOEs approved for equitisation completed the process, and state divestment during the period reached just 11 per cent of its targeted value.

Momentum remained weak in the five years that followed. By the end of 2025, none of the 30 SOEs scheduled for equitisation had completed the process, and only 19 of 146 planned divestments had been executed.

As a result, many SOEs remain tightly held, with government entities and strategic shareholders controlling more than 90 per cent of equity, limiting liquidity and institutional participation.

Some of Vietnam’s biggest public and listed firms fall into this category, including Joint Stock Commercial Bank for Investment and Development of Vietnam, Vietnam Rubber Group, Viettel Global, Airports Corporation of Vietnam, and Vietnam Maritime Corporation. 

But a new wave of reforms has revived expectations that Vietnam could accelerate sales of state holdings in the coming years.

These moves are anchored by the 2025 Law on Management and Investment of State Capital in Enterprises, and its implementing framework under Decree 57.

SOEs now have greater autonomy in divestment decisions and capital allocation.

At the same time, the policy focus is moving away from the mechanical reorganisation and valuation of state assets and towards improving real operational performance, production capacity and market competitiveness.

These rules mandate pre-initial public offering financial clean-ups and stricter audit linkages to curb valuation manipulation, while raising requirements for strategic investors – including sector expertise, technological capability and proven management track record.

Public companies – including state-owned ones – are meanwhile required by Vietnam’s 2024 Securities Law to maintain at least 10 per cent of voting shares in the hands of 100 minority shareholders at the minimum, among others.

Authorities strengthened enforcement earlier this year, warning that companies failing to meet these requirements risk losing public company status, with remediation grace periods in certain cases extending only until early 2027.

Recent data provided by the State Securities Commission indicated that among 789 SOE-origin public firms, 67 fail free-float requirements, 53 fall short on capital thresholds, and 41 have yet to list or register shares for trading.

“From a technical perspective, the commonly cited solution is for the state to further reduce its ownership to increase free float,” said Nguyen Dac Huan, senior associate and head of origination at Rocket Equities, a South-east Asia-focused financial advisory firm.

“However, if we look at how large SOEs actually operate in practice, this is not necessarily a real priority – and it is also not an easy problem to solve,” he added.

He noted that unlike private companies, Vietnam’s SOEs do not typically rely on the stock market for growth capital. They instead fund expansion through internal cash flow, bank credit, international loans or intra-conglomerate capital allocation. 

Listing also adds significant compliance burdens such as disclosure, auditing and shareholder governance obligations.

“If listing does not help to raise capital, create strategic partnerships, support mergers and acquisitions, or genuinely improve governance, then maintaining listed status at all costs may not be the optimal choice,” Huan said. 

He estimated that further 10 per cent stake sales across six major state-backed issuers could amount to 42 trillion to 46 trillion dong (S$2.1 billion to S$2.2 billion).

He was referring to PetroVietnam Power, PetroVietnam Gas, Petrolimex, Binh Son Refining and Petrochemical, Vietnam National Shipping Lines and Viettel Global.

“This is a scale that far exceeds the normal absorption capacity of the domestic market if implemented simultaneously,” he added.

Foreign capital may enter – but at what price? 

The participation of foreign institutional investors is crucial when it comes to large-ticket acquisitions and long-term capital.

Beselin of Endurance Capital said there are many “interesting assets” in Vietnam’s privatisation pipeline that his fund would like to invest in, but has been unable to.

These include entities listed under Decree 57, which names 20 firms under the prime minister’s authority for state capital restructuring.

On the roster are industry leaders such as Vietnam Electricity, Vietnam National Industry-Energy Group, Vietnam Railways and Vietnam Airlines. 

“Tell me (at) what price I can buy them,” Beselin said, adding that the most important thing is ensuring a fair auction or price discovery process for these assets, and a genuine willingness to sell at market price.

“Ultimately, every investor needs to look at what the total upside is, what they are looking for, and on what time horizon.”

Many SOEs also remain stranded on the Unlisted Public Company Market, a smaller bourse with lower liquidity than the main Ho Chi Minh City Stock Exchange. This limits access for foreign institutional investors.

Huan pointed out that deal structures – including stake sizes, control rights, exit timelines and liquidity conditions – are often not well-aligned for large foreign investors to come in.

This is despite many SOEs posting strong business results and being, in theory, attractive investment assets. 

“Vietnamese SOEs may appear to offer relatively decent dividend yields on the surface, but they are often not sufficient to compensate for governance discounts, liquidity discounts, minority shareholder discounts and country risk,” he added.

Further, a series of governance scandals – including high-profile investigations and arrests involving senior executives – and accounting issues over the past decade have also left foreign investors wary of opaque state-linked businesses.

Strategic investors, Huan said, are also unlikely to acquire minority stakes without operational influence, synergies or a credible path to control – particularly as many SOEs are still subject to mandated state-retention levels and gradual divestment plans.

“If there is no control story, dividend income alone rarely closes a large state asset deal,” he noted.

Room for optimism 

Still, appetite for this asset type appears strongest among those willing to endure long restructuring cycles in exchange for exposure to Vietnam’s economic rise. 

“Many investors are quite open to being part of that journey – helping (SOEs) clean up governance and evolve into professionally run, world-class enterprises,” said Beselin.

“We need more long-term capital for that type of change journey (over many years).” 

He also pointed out that Vietnam’s slow-moving privatisation process has, in some cases, produced stronger companies compared with rapid sell-offs seen elsewhere in Asia. 

It is a gradual process of allowing companies to adapt to private ownership, governance, stakeholders and market competition. 

“Look at the big, very well-known consumer giants – they all come from this state-owned background, evolving through successive iterations into increasingly privately oriented companies,” he said.

Highlighting Vietnam Dairy Products, Phu Nhuan Jewelry and Saigon Beer-Alcohol-Beverage Corporation, he added: “It’s impressive how many of them have turned out well in terms of actually becoming leading private companies in the end.” 

Some of the most appealing assets may not be the large parent companies listed on the market, with advisers suggesting a more appropriate tactic of downgrading listing status, restructuring assets, and carving out more attractive subsidiaries before considering equity divestment.

“They have many sub-assets that should be addressed in a rational and return-optimising manner,” Beselin said.

“If you go one or two levels down, these assets might be separated or sold off, which is going to unlock a lot of value in the whole ecosystem.”