Vinatex has got permission to sell a combined 24 per cent stake to two domestic property firms, ahead of the state-run firm’s IPO this week.
Vinatex is Vietnam's largest apparel manufacturer and exporter. It will sell 10 per cent of the stake to Vingroup, the country’s third largest listed firm by market value, and 14 per cent to the unlisted Vietnam Investment Development Group.
Vinatex is dominating the Vietnamese textile sector and expects to gain strongly from trade pacts Vietnam is negotiating, including the 12-nation Trans-Pacific Partnership. The Trans-Pacific Partnership has been under negotiation for five years and would make Vietnamese garments more competitive than those of China, currently the biggest textile exporter to the US market. Vietnam is negotiating free trade agreements with the EU, South Korea and other countries.
Vinatex wants to raise registered capital to invest in yarn production, weaving and dyeing and stitching to reduce reliance on Chinese imports and qualify for the TPP’s yarn forward requirement concerning locally made materials.
The company projects a 28 per cent increase in net profit this year. However its profit margin could fall due to rising domestic competition as local firms boost production ahead of the TPP signing.