Vietnam: Divestment plan for Sabeco submitted

Saigon Beer Alcohol Beverage Corp. (Sabeco) is one step closer to a privatization. Vietnam's trade ministry has submitted a plan for the divestment of the government's majority stake in Vietnam’s largest brewer to the government, the CEO of the company, Le Hong Xanh, told shareholders at the company's annual general meeting on Tuesday. “The ministry of industry and trade has proposed a plan to the government and it is awaiting approval," he told shareholders. Still, it is not clear, how long the process will take.

The country's second-biggest listed firm by market value, is part of a major privatization wave of the socialist regime, which includes other companies like Vietnam Airlines, dairy firm Vinamilk and the other state-owned brewer Habeco. The country already started with its idiosyncratic two-stage divestment process, which began last year with a limited IPO (, 12.12.2016).

Sabeco reported this week that it got approval to appoint Ernst & Young and Bao Viet Securities as advisors on the sale which is worth $5.2 billion at market price. Vietnamese Ministry of Industry and Trade is still holding a controlling stake of 89.59% in Sabeco but has announced to sell it entirely in 2017. Foreign ownership in the company is said to be 9.39%. Heineken already holds a 5% stake in the brewery and is therefore considered frontrunner in race for Sabeco.

The brewery is one of the most attractive take-over targets in the international beer world. Vietnam has one of the world’s fastest-growing economies due to its young population and a rising middle class. Last year, Vietnam produced 37.8 million hectoliters of beer (+ 9.3%). Since 2010 the beer market has gained stunning 40.72%.

Sabeco, the biggest player in the market, reported an increase of 7.4% in sales volume for the last year, up to 16 million hectoliters. Habeco, the other state-owned brewer and the number two in the market, sold 7,2 million hectoliters in 2016, which is only 2,1% more than the year before. Foreign breweries including Heineken and Carlsberg outperformed the market with a total of 14 million hectoliters, which means an increase of 15.7% year-on-year.

Sabeco’s CEO Le Hong Xanh, who will turn this year 60 and reaches the legal retiring age, will resign from his office on July 1, 2017. It is hoped, that a new owner of Sabeco will be found by that time.

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