Top state-owned beverage company plans to sell half its stake

By Bach Duong   May 13, 2016 | 05:13 pm GMT+7

Saigon Beverage Company (Sabeco) coupled with the Ministry of Industry and Trade is seeking approval from the Vietnamese government to sell 53 percent of its stake through public auction.

A report by the Vietnam Beverage Association showed that the country is the fifth largest consumer of beer in the world, with Sabeco accounting for 46 percent of the domestic market share.

Should the plan be approved, the rate of state ownership in Sabeco will fall from 89.59 percent to 36 percent.

This is not the first time Sabeco has outlined a proposal to sell a majority stake. Many experts say that Sabeco is viewed as one of the most profitable state-owned companies in Vietnam, forcing the government to weigh up the pros and cons before delivering the final decision.

A representative from Sabeco told VnExpress that investors need to meet specific requirements to purchase its stake. At present, the government has yet to approve the plan, so Sabeco is not able to list those requirements for strategic investors.

So far, more than ten investors have registered an interest in buying into Sabeco, including big names like Heineken (the Netherlands), ThaiBev (Thailand) and SAB Miller (the U.S.). Millionaire Charoen Sirivadhanabhakdi from ThaiBev previously offer $2 billion for a 40 percent stake, but the company turned him down.

The Vietnam Association of Financial Investors has also asked the ministry and the government to sell off nearly 90 percent of the state-owned stake in Sabeco.

“Ten years ago, Sabeco was far larger than Vinamilk (Vietnam’s top dairy company) and its profits also doubled Vinamilk’s. Now Vinamilk’s profits are three times more than Sabeco’s,” the association said, adding that eight years since its IPO, Sabeco's growth remains sluggish despite its development potential.

Last year, Sabeco sold 1.5 billion liters of beer, accounting for 44.6 percent of the beer consumed in Vietnam in 2015.

Though acting as the dominant player in the local beer market, Sabeco is facing challenges with Heineken becoming Vietnam’s second largest beer supplier and domestic beer consumption leveling off in the first four months of the year.

 
 
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