THE Vietnamese Government will likely fail to sell much of the 9 percent stake it has offered in dairy firm Vinamilk, one of its most attractive assets, with investors put off by highly restrictive investment caps and unfavorable market conditions.

    State Capital Investment Corp. (SCIC), which represents the government’s 44.7 percent ownership in Vinamilk, took the market by surprise last month when it announced each investor could only buy up to 2.7 percent of Vinamilk’s shares.

    That has helped result in just two bids, worth a combined US$500 million, by wholly owned units of Thailand’s Fraser and Neave Ltd. for the shares, which were due to sold yesterday. One of the units is already Vinamilk’s second-biggest shareholder with a 10.95 percent stake.

    The muddled sale process has underscored Vietnam’s relative inexperience and investor wariness about state control as the government seeks to push forward with a major privatization drive — one that already been hampered due to the small stakes on offer and concerns about vested interests.

    Also detering investors has been a drop in Vinamilk’s share price below the minimum bidding price set by the government of 144,000 dong (US$6.37). The stock has been hit by a selloff in Vietnamese shares as investors shun emerging markets amid uncertainties after the U.S. presidential election and a potential rates hike by the Federal Reserve.

    “The minimum bidding price of 144,000 dong is actually not expensive for a strategic investor in Vinamilk, but the issues are the timing and the restrictions that come with it,” said Nguyen Thanh Lam, deputy manager at Maybank Kim Eng Securities in Vietnam.

    (SD-Agencies)

    Caption:

    Vinamilk products are displayed for sale at a shop in Hanoi, Vietnam, yesterday. The Vietnamese Government will likely fail to sell much of the 9 percent stake it has offered in dairy firm Vinamilk, with investors put off by highly restrictive investment caps and unfavorable market conditions.

    (SD-Agencies)