The country's leading confectioner organized the road show in Singapore on August 6 to beef up an issue of five million shares, with 1.2 million sold in this IPO and the rest set to go to the company's strategic investors and partners. 

Three foreign institutional and individual investors acquired about 1.14 million shares and about 20 local investors got the remainder in the 1.2-million-share auction.

An investor won the right to buy 600,000 shares for VND46,000 each, the highest bid, becoming the biggest taker.

Bao Viet Securities, which was the sole underwriter of the sale and was contracted to take any unsold shares, did not name the biggest winner but investors claimed it was Temasek, a Singapore finance investor.

The reserve price was VND34,000 per share, which was deemed as too high before the launch of the IPO, but the average winning price was VND43,350, indicating strong investor interest in Kinh Do’s shares.

In fact, individual investors bid for 1.3 million shares and institutional investors sought to acquire 3.6 million shares but the company offered only 1.2 million shares.

Among 10 foreign and 184 local investors who registered to join the auction, PXP Vietnam Asset Management Ltd. sought 500,000 shares for VND38,200 each but in vain because the lowest winning bid was high, at VND40,500, compared to the face value of VND10,000.

The auction at the HCMC Securities Trading Center brought total revenue of VND52 billion (US$3.3 million), leading to Kinh Do’s registered capital leaping to more than VND250 billion from the current VND200 billion.

Director Kevin Snowball of PXP Vietnam Asset Management Ltd. told the Daily that the shares were very expensive and it was not easy for investors who got shares for VND46,000 to earn a margin. "It’s difficult to make money with the price."

Kinh Do general director Tran Le Nguyen said stock dealers had expected the price to hover around VND41,000 per share in the auction. "We are very happy with the good outcome. This shows investors have placed confidence in the Kinh Do confectionery brand," he told the Daily.

The share sales aim to raise funds for a project in HCMC’s adjoining province of Binh Duong, in which Kinh Do has been licensed to join forces with two individual investors to establish a VND100-billion joint-stock firm.

It holds a stake of 80% in Kinh Do Binh Duong, which will invest VND270 billion in a factory in the Vietnam-Singapore Industrial Park (VSIP) to make crackers, cupcakes and layer cakes. The 13-hectare facility is under construction and will be up and running by the third quarter of 2006.

Kinh Do plans to seek a license to list on the bourse by the end of this year. It is widely expected that Kinh Do will merge with the already-listed North Kinh Do, of which it holds almost half of the shares.

It is looking to generate 2005 revenue of VND870 billion and a pre-tax profit of VND95 billion. The respective figures for next year are forecast at VND1.25 trillion and VND200 billion.

(By Saigon Times Daily, No. 2503 - Monday, 8, 15, 2005)