STRONG STOMACH NEEDED

Still, the Vietnam market is not for the faint hearted.

Few bankers, investors or lawyers interviewed for this article expect the stop-start process of recent years — characterized by fickle policy making, vested interests and high valuations — to disappear overnight.

As an example, they point to the unorthodox way in which the Sabeco stake is being sold.

In spite of the sale being known about for months, a lack of detail about the size, price or structure until last week means bidders have been given just under three weeks to get their paperwork in order, including arranging deposits and guarantees and setting up onshore accounts.

Unlike the auctions familiar in developed markets, where investors are whittled down over several rounds and offers can be adjusted, Sabeco bidders need to submit a single price for a specific number of shares in a sealed envelope in one round.

“I have never seen a process like this for such a large sale. To bid all or nothing is very weird,” said one banker. “People know this process is crazy. They are trying to solve the puzzle.”

All bids will be ranked only by price, so the highest bidder’s offer will be accepted in full, with remaining shares allocated to the next highest bidders regardless of how many shares they originally bid, the sale documents show.

In theory, for foreigners, the process means a bidder offering the highest price and seeking a 25% stake would get that, leaving a rival that offered a price just pennies lower but who wanted the maximum 39%, with just 14%. Foreigners are restricted to 49% total ownership and already hold 10%, led by Heineken with 5%.

Since listing on the Ho Chi Minh exchange last December, Sabeco’s share price has tripled. Its enterprise value is now 37 times its core profit versus close to 15 for some of the largest global brewers, according to Reuters data.

The stocks rally has left Vietnam as one of the most expensive markets in Asia and dealmakers fear the current optimism could be at risk if prices began slipping.

“The market is frothy. And if it crashes, then everyone just goes on to the next thing. It could change very quickly,’ said Tony Foster, Vietnam managing partner for Freshfields Brukhaus Deringer, who has worked in Hanoi for over two decades. —