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BusinessesBusinesses dare not list shares on bourses for fear of being taken over do not intend to list their shares on the bourses these days, because it is now not the right time for them to seek capital on the stock market.

No hope for finding capital on stock market

A senior official of the State Securities Commission (SSC) said that the total capital raised on the stock market in the first six months of the year reached 84 trillion dong, a two fold increase over the same period of the last year. However, the capital has been raised mostly through the government bond bids (79 trillion dong and equitization auctions (206 billion dong).

Meanwhile, only 4.8 trillion dong was mobilized through the share issues, a sharp fall of 50 percent over the same period of the last year.

Also according to the official, most of the companies issued shares to separated investors, while very few of them issued shares to the public. He said that it seems to be easier for enterprises to negotiate directly with the institutions which want to contribute capital, while it would be difficult to persuade small individual investors to buy shares in the current financial difficulties.

Dinh Quang Hoan, Finance Director of the Ban Viet Securities Company, also said unlike previous years, the year 2012 has witnessed very few businesses planning to issue shares to increase capital. It would be very costly to mobilize capital, while it is very difficult to find buyers.

In principle, businesses think of issuing shares to seek capital from different sources, since banks have tightened their credit policy. However, if a business cannot meet the requirements to borrow money from banks, it would not be capable enough to issue shares.

The General Director of a company said that his company planned to issue shares to increase the chartered capital by two folds. However, its plan to sell shares at the prices below the face value was rejected by SSC. Meanwhile, the investor, who initially planned to contribute capital to the company, has given up the idea.

He said that the company is considering another share issuance plan with which the capital to be mobilized is expected to be equal to 50 percent of the initially planned volume. This is the second delay of the company after it canceled the share issuance in 2011.

A lot of commercial banks earlier this year stated that they would issue shares to increase chartered capital this year. However, no move has been made so far by the banks.

Businesses delay listing plans for indefinite time

The An Giang Plant Protection Chemical Company got the approval from SSC to list shares on the bourse in June 2011. However, the listing plan was hung about continuously. In April 2012, the board of directors had to explain at the shareholder’s meeting why the plan has been delayed, while promising to speed up the listing.

However, in the latest news, the company’s President Huynh Van Thon said the company has canceled the idea, and surprisingly, the shareholders, who previously urged him to list shares, have agreed on the cancelation.

There are three reasons behind the decision by the An Giang Plant Protection Chemical Company to delay its listing plan.

First, it is afraid of being taken over by hostile forces. Secondly, the Japanese investors which plan to contribute capital to the company said they do not want the company’s shares listed on the bourse. And thirdly, the company’s leadership fears that the share prices would decrease dramatically and lose liquidity like the shares of some other companies in the agriculture sector.

TBKTSG

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