Local brokerages rush to raise capital

Investors trade at MB Securities Company (MBS). MB Securities Company (MBS) has recently approved a plan for three rounds of share issuances to increase its charter capital from 1.2 trillion VND to 1.7 trillion VND (Photo: tinnhanhchungkhoan.vn)

Hanoi (VNS/VNA) - Vietnamese securities companies are looking to raise capital to supplement business activities and enhance operational efficiency.

Viet Capital Securities Company (VCSC) has announced a bond issuance plan worth 331.5 billion VND (14.3 million USD) from now until January 2020.

This offering is part of a plan approved by the Board of Directors with a total bond issuance value of 500 billion VND.

The bond yield rate of each issuance depends on the business performance of the company at that period, but must not exceed average interest rates of mid-term deposits at the State-owned Bank for Investment and Development of Vietnam and VietinBank, plus 3 percent per year.

VCSC will use 500 billion VND collected from the bond issuance to supplement capital for securities trading and margin lending.

The Board of Directors of Saigon Securities Company (SSI) is also consulting shareholders about a share issuance plan to pay dividends at 16 percent. If approved, SSI will increase its charter capital to over 6 trillion VND.

Domestic securities companies are trying to raise capital to keep up with foreign companies that are increasing in size, creating strong competitive pressure.

For example, the Republic of Korean securities firm Mirae Asset (Vietnam) Securities Co Ltd is in process of raising its charter capital from 4.3 trillion VND to over 5.45 trillion VND, thereby becoming the securities company with largest charter capital in the market.

Among 18 companies with charter capital of over 1 trillion VND, there are five foreign-invested companies: Mirae Asset, KB Vietnam, KIS Vietnam, Yuanta Vietnam and Maybank Kim Eng.

Vu Duc Tien, general director of Saigon-Hanoi Securities Company (SHS), said foreign brokerages have been developing rapidly in recent years, especially in terms of capital scale with the backing of their parent companies.
This created many challenges for domestic securities companies, Tien said.

Other domestic securities companies planned to raise capital in 2019 but have delayed until 2020.

MB Securities Company (MBS) recently approved a plan for three rounds of share issuance to increase its charter capital from 1.2 trillion VND to 1.7 trillion VND, including 35 million shares for existing shareholders, five million shares under ESOP and a dividend payout at a rate of 10 percent.

Vu Hong Son, chairman of the board of directors of Everest Securities JSC (EVS), said the company’s plan to increase charter capital from 600 billion VND to 1 trillion VND has not been implemented and will be delayed until 2020./.