* Vietnam sees garment sector benefiting from TPP trade pact
* Privatisation of state firms priority for govt
* Vinatex to offer up to 24 pct of firm in IPO
* SOEs difficult to value due to lack of public information
(Adds implications of trade pact, details of privatisations)
By Ho Binh Minh
HANOI, June 17 Vietnam's Vinatex, a state-run
producer of garments and textiles, is planning an initial public
offering next month to fund expansion and capitalise on a
potential Pacific trade pact that would boost exports.
Vietnam's textiles industry, its second-biggest cash earner
after cellphones, is expected to gain from a long-awaited
Trans-Pacific Partnership (TPP), a trade pact that would make
its garments more competitive than those of China, the biggest
textile exporter to the U.S. market.
The offering by the country's biggest textile firm could
also be the biggest so far in a series of share sales by
state-owned enterprises - part of a government plan to reform a
state sector blighted by inefficiency and debt.
With the partial privatisations, the government hopes to win
the confidence of foreign investors as it pursues ambitious
goals to achieve GDP growth of around 6 percent.
"Only IPOs of major state-owned companies can help draw
foreign investment and Vinatex coming in is a good sign to show
progress is being made," said Nguyen Chi Trung, deputy general
director of Ho Chi Minh City-based Rong Viet Securities.
Vinatex, or Vietnam National Textile and Garment Group, as
the company is formally known, said late on Monday it would
conduct its IPO on July 22. Its prospectus is set to be released
It did not say how much it plans to raise and it was unclear
when it would list on one of Vietnam's two stock exchanges. In
Vietnam, companies offering shares can take up to a year after
the IPO before listing.
DIFFICULT TO VALUE
Analysts say it is difficult to value state-owned companies
as many need restructuring and there is little public
information about their assets. State-run lender BIDV
raised around $75 million its initial public offering in
Vinatex has government permission to offer up to 24.4
percent of its shares in the IPO. Another 24 percent is slated
to be sold to strategic investors, while the state plans to
retain 51 percent of the firm.
Vinatex, an expected September offering from national
carrier Vietnam Airlines and one from mobile phone network
operator MobiFone are likely to catch the eye of foreign
investors but most IPOs of state-run firms will not.
Hanoi has said it aims to privatise 432 state-owned
enterprises in 2014 and 2015 - a pace that officials doubt is
sustainable, while stock analysts say a glut of IPOs would help
neither investors nor businesses.
Vietnam's benchmark index was Southeast Asia's best
performer last year, rising 22 percent and while it took a bit
of a knock last month on tensions with China, it is still up 13
percent for the year to date.
Vinatex expects to have exported $1.62 billion worth of
textile and clothing products in the January-June period, up 15
percent from a year ago and accounting for nearly 16 percent of
Vietnam's total in the period.
Its outlook would improve tremendously if Pacific trading
partners were to agree to deal on a new trade zone. Sources
close to the negotiations have said some countries are pushing
for a deal in the next few months but others caution that a pact
is still a long way off.
The TPP, which has been under negotiation for five years,
aims to connect 12 countries, including the United States and
Japan, by cutting trade barriers and harmonizing standards in a
deal covering a third of global trade.
Around 60 percent of Vietnam's textiles and garments are
shipped to countries that would be covered by the TPP.
The government has been boosting investment in the industry,
which contributes up to 15 percent to the country's annual gross
Textiles and garments exports drew $18 billion in 2013, up
19 percent from the previous year and Vinatex expects that to
rise to $24 billion this year due to better economic conditions
in export markets.
(Editing by Martin Petty and Edwina Gibbs)