In an attempt to raise capital through increased foreign investment, Tran Xuan Ha, president of Vietnam's State Securities Commission, ordered the downsizing of the government's majority stake in Vinamilk from 75 to 60 per cent in a public share sale - netting Vinamilk approximately VND572 billion (€27.4 million).
According to Vietnamese press reports, foreign investors bought 1,826,900 shares (one of which reportedly bought 800,000 alone) out of the 1,827,000 shares offered - at prices ranging between VND266,100 and VND420,000 each (€12.8 and €20.1 respectively).
And despite over one hundred and twenty-two investors participating in the auction (eighty-two of which were Vietnamese), only one domestic investor managed to procure shares in the company - 100 at VND2,222,000 (€106.6) each, despite Vinamilk's initial share price recommendation of VND220,000 (€10.6) per share.
Following the share sale at the Ho Chi Minh (HCM) City Securities Trading Centre last Thursday, Xuan Ha also pledged to facilitate easier access for financial institutions, listed companies and international and local investors wishing to participate in subsequent share auctions.
Foreign investors now own an estimated 16 per cent stake in Vietnam's largest equitised company, worth an estimated VND2.3 trillion (€1.1 billion) and analysts have predicted that its 2004 profits of VND464 billion (€22.4 million) are expected to increase by 13 per this year, to around VND527 billion (€25.3 million).
Vinamilk, formally known as the Vietnam Dairy Products Company, has substantial interests in the domestic dairy industry, controlling approximately 40 per cent of Vietnam's milk market and operating seven production facilities across the country.
Its core dairy activities include fresh milk, drinking yoghurt and condensed milk, although its nearest rival, Dutch Lady, still holds the leadership in brand sales.
The Vietnamese government has reportedly expressed a desire to offload up to 49 per cent of its shares in Vinamilk, but the fact it will retain a majority stake will no doubt afford the company similar favourable operating conditions as those received prior to its equitisation.
According to industry analysts Euromonitor International, the dairy sector is one of the fastest growing sectors in Vietnam's packaged food category, with 2005 sales (in current value terms) expected to reach VND4.3 trillion (€2.1 billion).
Vietnam has previously proved an attractive target for overseas investors, with its favourable location helping it secure lucrative exporting contracts to the Middle East and Australia, in addition to the US and the rest of Southeast Asia (particularly Cambodia).
Recently the company has won a tender to export 12,000 tons of milk powder to Iraq worth a reported US$21 million (€15.9 million), with another US$3 million (€2.3 million) contract to supply Australia to come into effect later this year.