Broker Vietcap to issue private placement shares to strategic investors

Vietnamese broker Vietcap Securities plans private placements of shares to strategic investors to raise its charter capital this year, CEO To Hai said Tuesday.

“We are working closely with three strategic investors. There is still a large gap between the two sides, especially in price. However, we will try to close the gap, with top priority given to price. The offered price cannot be much lower than the market price,” he said at the company’s annual general shareholders’ meeting.

Vietcap chairwoman Nguyen Thanh Phuong noted that the stock market was continuously growing in size, and the government has planned to expand its scale in the future, reaching 100% of the country’s GDP by 2025 and 120% by 2030. Vietnam also aims to upgrade its stock market status from a frontier to an emerging market before 2025.

Meanwhile, some business activities of securities companies such as lending to margin trading and stock investment are restricted on equity-based limits, she said.

"Therefore, to continue maintaining growth momentum and market share, the company needs to increase its charter capital," she added.

Vietcap, listed on the Ho Chi Minh Stock Exchange as VCI, plans to increase its charter capital from VND4,375 billion to VND7,181 billion ($286.3 million) through three options.

First, the company will issue 4.4 million Employment Stock Ownership Plan (ESOP) shares, equivalent to 1% of charter capital, at a price of VND12,000 ($0.48) per share. Next, it will issue another 132.57 million units to increase capital via equity financing at a rate of 30%.

Finally, it will offer 143.6 million shares, priced no lower than the book value of VND16,849 ($0.67) per share at the end of 2023, via private placement. Privately placed shares are restricted from transfer for at least one year from the date of issuance.

The chairwoman reiterated that the company was mobilizing capital to improve competitiveness and business performance as well as upgrade its information technology system to ensure smooth, efficient and safe transactions.

CEO Hai said the company was targeting VND2.51 trillion ($100.12 million) in revenue and VND700 billion ($27.9 million) in pre-tax profit this year, up 1.56% and 22.78% year-on-year, respectively.

These business targets are based on forecasts that the VN-Index, which represents the Ho Chi Minh Stock Exchange, will hit around 1,300 points by the end of 2024.

In the first quarter alone, the company expects to rake in VND220 billion ($8.77 million) in pre-tax profits, equivalent to 31.4% of the year's plan, Hai said.

The company aims to regain its position in the top 5 stock brokers by the end of this year, he added.

Deputy CEO Dinh Quang Hoan said that in 2023, Vietcap's investment banking segment recorded the worst results since its listing, successfully carrying out only one deal - transfer and private placement of a total of 12.56% of the charter capital of International Dairy Products JSC (UPCoM: IDP) to Growtheum Capital Partners, a fund from Singapore.

The executive said that initial public offering (IPO) activities are forecast not to have many positive changes, but interest rates tend to decrease and attractive business valuations will help the capital market in 2024 prosper. With ongoing projects, the investment banking segment is expected to contribute greater revenue and profit in the near future.

“We currently have consulting contracts with a total value of VND45-50 trillion ($1.99 billion), including two deals of over VND10 trillion. We expect to complete one deal this year, earning significant revenue," Hoan said.

There were also positive signs in the brokerage segment that indicates the firm’s market share in the first quarter of 2024 could exceed 6%, up from 5% in the same period last year.

VCI shares closed Tuesday at VND53,600 ($2.14) apiece.