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The Initial Public Offering of BIDV


Lesson for other banks IPO in Vietnam
GROUP 4 K48B

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Group members
No. 1 2 3 4 5 6 Full name Cao Th Kiu Nh Lm Hunh Thanh Trc V Phm Minh Tr Trn Duy Qun Nguyn V Vng Nguyn Ng Quang V ID 0952015312 0952015383 0952015298 0952015323 0952015392 0952015393

Contents

Introduction Process of BIDVs IPO General evaluation Lesson for other Banks 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.

Introduction
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

Introductioni

After Vietcombank and Vietinbank, in the end of 2011 Bank for Investment and Development of Vietnam (BIDV) - the countrys 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 BIDVs 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 banks equitization plan. The launch of its IPO before or after selling shares to strategic partners will depend on the Governments approval.

Introduction
1% 3% 1%
15%

Percentage
Government Foreign strategic and financial investors Staff The BIDV's labor union 80% Other

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

Process of BIDVs IPO

On November, 30th 2011: Decision No. 2124/Q-TTG of the Prime Minister for IPO of BIDV was published. IPOs Press release was held.

Process of BIDVs IPO


The structure of capitalization of BIDV
Charter capital of BIDV is 28,251,382,000,000 VND Par 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 BIDVs IPO

On December 5th 2011, Government's Office issued the Document No. 1392/VPCP-MDN on BIDV's IPO The auction was registered on December 21st-2011

Process of BIDVs 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 BIDVs IPO

Selling shares to employees and trade unions before December 31st 2011 The last day for voting auction was December 26th 2011

Process of BIDVs 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

Process of BIDVs IPO

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

General evaluation
In general, it can be say thats a success of BIDV. So, to get that, BIDV has some featured advantages. The biggest, fastest IPO has ever released in VN 21 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

General evaluation
And we can see, thats a transparent in information for both VN and foreign investors. Clearly, in a bad stock market performance, its the most successful IPO with eligible bid at about 99.91%, a good event in that time. But, the contracts the proportion of IPO among equity is very low (3%), and the times too short for investor to fund.

Lesson for other Banks IPO


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 Banks 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 Banks IPO The first lesson for other State company:

Creating the suitable proportion of IPO among the equity

Lesson for other Banks 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 Banks IPO The second lesson:

Allocating the detail time for each period of IPO

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