HANOI, Vietman (Reuters) — Vinatex, Vietnam's top textiles manufacturer, on Wednesday said it will take up to three years to list its shares on the stock market after an initial public offering planned for later this month.
In Vietnam, an IPO and listing are two separate processes that can sometimes be years apart.
State-run Vinatex, or Vietnam National Textile and Garment Group, plans to sell shares to fund restructuring and boost profit, in a listing it hopes would coincide with the agreement of the Trans-Pacific Partnership — a 12-nation pact that would cover a third of global trade.
"We will strive to list in three years, and if conditions are favorable — the TPP is signed or better [earnings] ratios are reported — the listing could come faster," Vinatex general director Tran Quang Nghi told investors on Wednesday.
The IPO of Hanoi-based Vinatex is widely seen as one of the more attractive in the communist country, where the government is reforming a largely inefficient state sector that accounts for about half of the country's debt.
Vinatex will conduct its IPO on the Hochiminh Stock Exchange on July 22, offering 24.4 percent of the company, or 122 million shares, at a starting price of 11,000 dong, or 52 cents at current exchange, each.
Another 24 percent would be sold to yet-to-be-determined strategic investors, 0.6 percent would be sold to employees and the state would retain 51 percent.
Garments and textiles are Vietnam's second-biggest cash earner after cell phones, netting $18 billion in 2013, with the figure projected to rise to $24 billion this year. Vinatex estimates about two thirds of that, however, is spent on importing materials, mainly from China.
The TPP has been under negotiation for five years and would make Vietnamese garments more competitive than those of China, currently the biggest textile exporter to the U.S. market.
Vinatex said it wants to raise registered capital to 5 trillion dong ($234.6 million) from 3.4 trillion dong ($159.8 million) to invest in yarn production, weaving and dyeing, and stitching — to reduce reliance on Chinese imports and qualify for the TPP's "yarn forward" requirement concerning locally made materials.
The company projects a 28 percent increase in net profit this year to 300 billion dong ($14.1 million) from 234 billion dong (about $11 million) in 2013. It said its profit margin could fall due to rising domestic competition as local firms boost production ahead of the TPP signing.
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