Vietnam's first foreign float

The state-run Bank for Foreign Trade of Vietnam, known as Vietcombank, is planning an initial public offering that would be the country's first foreign stock listing, sources familiar with the situation said yesterday.

The IPO would give foreign investors a rare chance to invest in an economy that is growing at more than 7 per cent a year, and follows Vietnam's first-ever sovereign debt issue in October.

That US$750 million ($1.14 billion) bond sale, arranged by Credit Suisse, attracted orders worth more than US$4.5 billion and underscored the demand for access to a market where surging entrepreneurship is driving consumption growth at 20 per cent a year.

Four global investment banks - Citigroup, Credit Suisse, Goldman Sachs and UBS - have been asked to submit IPO proposals for Vietcombank, sources said.

Sources said the bank may seek a dual domestic and overseas listing, with Hong Kong and Singapore potentially hosting the offshore part of the deal.

Vietcombank had assets of US$8.3 billion at the end of 2005, up from US$7.6 billion a year earlier.

Non-performing loans (NPLs) at banks in Vietnam account for roughly 4 per cent to 8 per cent of the total.

"The risk is that the recent increase in lending could mean a rise in NPLs over the medium-term," JP Morgan credit analyst Sin Beng Ong wrote in a recent report.

Vietnam is looking to build up its fledgling stock market, but with market capitalisation of just US$1.2 billion and thin liquidity, its ability to absorb a big local IPO is limited.

On one day in January alone, the bourse's market value more than doubled because of the trading debut of dairy producer Vietnam Dairy Products.

The Vietnam Index has gained 57 per cent in the past year.

- REUTERS