Investors ready for $4.8 billion Vietnam beer offering

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Vietnam is seeking to raise at least $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 Vietnamese government currently owns nearly 90 percent of Saigon Beer Alcohol Beverage Corp., and will offer 53.6 percent of the brewer in the Dec. 18 sale, according to a briefing given last week in Ho Chi Minh Cityby Truong Thanh Hoai, Department Head of Industry and Trade Ministry. . The initial price offering has been set at 320,000 dong ($14.05) a share. That will be about 29 percent more than the average trading price over the past six months.

Foreign investors are limited to a 38.59 percent stake in the brewer. Combined with the 10.4 percent already held by investors from overseas, that would hit the foreign ownership cap imposed by Vietnam on some public companies. 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.

The Vietnam government developed a plan to divest from some of the country’s biggest companies, and 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 ($6.5 billion) in 2016.

Shares of Sabeco surged 5.9 percent at the close on Wednesday in Ho Chi Minh City trading. They have more than doubled since their December 2016 listing on expectations of the stake sale, which the government announced in August 2016. Last month, Vincom Retail JSC’s existing investors raised 16.1 trillion dong in what was the country’s largest first-time share sale.

These securities may be attractive to foreign investors interested in accessing the impressive 40 percent plus market share Sabeco holds in one of the most lucrative beer markets in the world.

Asahi had expressed interest in Sabeco earlier and is continuing to gather more information, Takuo Soga, a spokesman for the Japanese company, said on Wednesday, declining to comment on the price or the stake on offer. It was one of the companies that has said that Sabeco is too expensive.

Anheuser-Busch is committed to Vietnam and growing its business for the long term, the company said in a statement. “We look forward to playing a big role in the future of the Vietnam beer industry.”

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.

Hoai said he expects Anheuser-Busch to show keener interest in Sabeco as it would need to expand its local market share, while Heineken may not want to spend a huge amount as it already has a considerable piece of the market. The government won’t relax the stake limit it has set for foreign investors, he said.

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, Hoai said.

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