the initial public offering of bidv

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The Initial Public Offering of BIDV

GROUP 4 – K48B

Lesson for other bank’s IPO in Vietnam

Group members

No. Full name ID1 Cao Thị Kiều Như 09520153122 Lâm Huỳnh Thanh Trúc 09520153833 Võ Phạm Minh Trí 09520152984 Trần Duy Quân 09520153235 Nguyễn Vũ Vương 09520153926 Nguyễn Ngô Quang Vũ 0952015393

Contents

Introduction

Process of BIDV’s IPO

General evaluation

Lesson for other Bank’s IPO

Introduction

Over the last 5 years, stock market seems to be the most dynamic market in Vietnam for many reasons.

One of the most important reasons is the huge profit that the investors got from their business in the stock market.

• As the result, many join venture companies have been established and the Initial Public Offering (IPO) seems not to be the strange definition.

An Initial Public Offering (IPO) occurs when shares of stock in a company are sold to the general public for the first time. Through this process, a private company transforms into a public company

Introduction

Introductioni

After Vietcombank and Vietinbank, in the end of 2011 Bank for Investment and Development of Vietnam (BIDV) - the country’s second largest lender by assets and the third state-owned bank - went to public. This is considered to be one of the largest IPO in banking field in Vietnam.

Introduction

• As a long-established bank, BIDV has funded many investment projects and key economic areas of the country. Founded on April, 26th, 1957, BIDV is the oldest Commercial Bank in Vietnam. Fields of BIDV’s operation consist of: banking, insurance, stock, financial investments.

Introduction

Under its equitization plan being processed by relevant Ministries and the Central Bank, BIDV has carried out the corporate evaluation, create the IPO plan, and set out criteria for choosing foreign strategic investors. BIDV also strived to conclude the issue of shares to strategic partners within 2011 if market conditions are favorable

Introduction

The State will still own the controlling stake of at least 51%. Its shares will be sold in phases, and the stock will be listed on both the local bourse and overseas stock exchanges, according to the bank’s equitization plan.

The launch of its IPO before or after selling shares to strategic partners will depend on the Government’s approval.

Introduction

Lately, BIDV has equitized its offshoots BIDV Securities Company and BIDV Insurance Company, as well as merging its two finance leasing companies.

80%

15%

1% 1% 3%

Percentage

Government

Foreign strategic and financial investors

Staff

The BIDV's labor union

Other

Process of BIDV’s IPO

On November, 30th 2011:− Decision No. 2124/QĐ-TTG of the Prime

Minister for IPO of BIDV was published.− IPO’s Press release was held.

Process of BIDV’s IPO

The structure of capitalization of BIDV

Charter capital of BIDV is 28,251,382,000,000 VNDPar value: 10000 VND/share- In the first stage: total volume of issued shares is 22%

of charter capital.- In the second stage: + Issuing new shares to foreign investors with the

total not exceed 20% of charter capital + Issuing new shares to public + Diluting the share of the State to not lower than

65% of charter capital.

Process of BIDV’s IPO

• On December 5th 2011, Government's Office issued the Document No. 1392/VPCP-ĐMDN on BIDV's IPO

• The auction was registered on December 21st-2011

Process of BIDV’s IPO

• On December 24th 2011, The Hanoi Stock Exchange announced the result subscribe to shares of BIDV. The result of The IPO Auction was:

- Total number of offering shares: 84,754,146 shares - Maximum offering shares to foreign investors  

 84,754,146 share - Starting price: VND 18,500 /share - Total number of participants: 16,238 - Average sale price: VND 18,583/share - Total number of shares sold: 84,754,146 share - Total value of shares sold: VND 1,575,020,921,000

Process of BIDV’s IPO

• Selling shares to employees and trade unions before December 31st 2011

• The last day for voting auction was December 26th 2011

Process of BIDV’s IPO

• And on 16th January 2012, the results of an agreement to sell shares as follows:

-The total number of shares to be auctioned: 238,220 shares-Starting Price: VND 18,500/share

-The total volume registered to buy: 238,220 shares -Average successful bid price:VND 18,500/share -Total number of successful shares sold: 238,220

share -Total value of shares sold:  VND 4,407,070,000

• On 14th May 2012, with the approval of the State Securities Commission, BIDV officially became a public company

Process of BIDV’s IPO

General evaluation

• In general, it can be say that’s a success of BIDV. So, to get that, BIDV has some featured advantages.The biggest, fastest IPO has ever released in VN21 days

• Over 28 million of capital• Over 10 thousand shares ordered per day • With about 16 thousand registered investors• Over 1,500 news/articles on BIDV's IPO has been

published

• And we can see, that’s a transparent in information for both VN and foreign investors.Clearly, in a bad stock market performance, it’s the most successful IPO with eligible bid at about 99.91%, a good event in that time.

• But, the contract’s the proportion of IPO among equity is very low (3%), and the time’s too short for investor to fund.

General evaluation

• BIDV issued a 3 percent stake in its initial public offering

• Compared with other initial public offering: - Vietcombank, which issued a 6.5% stake - Vietinbank with 4% stake

BIDV issued a very low rate of stake.

Lesson for other Bank’s IPO

• With 80% stake hold by government, 1% by staff and 1% by labor union, and only 3% hold by other shareholders.

This IPO do not really bring much profit to the investors

Can not attract the foreign investors as well as domestic investors.

Lesson for other Bank’s IPO

The first lesson for other State company:

“Creating the suitable proportion of IPO among the equity”

Lesson for other Bank’s IPO

• In 2008, Vietinbank decide to go public, and they let their investors 3 months to prepare for their auction

• The investors in the Auction of BIDV just have less than 1 month.

The IPO of BIDV is was very rushed, the investors did not have much time to fund.

Lesson for other Bank’s IPO

The second lesson:

“Allocating the detail time for each period of IPO”

Lesson for other Bank’s IPO

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