MBBank increases capital by VND1.7 trillion

16:07 | 02/03/2020
The new shareholders of MBBank are foreign investors, however, the real successful transaction is lower than expected.  
mbbank increases capital by vnd17 trillion
MBBank staged a private placement and a treasury share issuance this year, both falling slightly short of their targets

MBBank (HXS-MBB) announced finishing a private placement on February 26, under which it issued 64.3 million shares at the price of VND27,000, collecting VND1.73 trillion ($75.2 million). The offering cost VND16.5 billion ($717,391).

KIM Vietnam Growth Equity Fund, a South Korea-based investment fund, purchased nearly 24 million newly-issued MBB shares, the largest portion of the issuance. Along with the treasury shares bought earlier, KIM owns nearly 32 million shares, equivalent to nearly 30 per cent of the shares in foreign hands.

Earlier, at the end of January 2019, MBBank also issued 21.4 million treasury shares. The buyers in both transactions were the same eight foreign financial investors. The price of the treasury shares has yet to be disclosed, however, investors are not subject to transfer restrictions as stipulated for newly-issued shares.

Based on the approval letter from the State Bank of Vietnam issued on January 31, MBBank is gunning to increase its charter capital to VND690 billion ($30 million), equivalent to 69 million newly-issued shares. In the latest private placement, which is thought to be instrumental in raising the bank's charter capital, 64.3 million shares were issued, which is slightly less than the plan.

This is not the first time this year that MBBank falls just a little short of its issuance target: at another treasury share issuance at the end of January 2020, MBBank sold 93 per cent of the registered amount at a price that failed to meet the expectations of the Board of Directors.

A Bloomberg source said that by the end of October 2019 MBBank planned to sell 7.5 per cent of its capital to foreign investors, including 141.5 million new shares and 47 million treasury shares. In a plan approved by the bank’s 2019 general shareholders' meeting, MBBank also proposed a plan to issue 211 million new shares.

Reducing the number of shares issued, on the other hand, helps the bank reduce the dilution pressure of stocks, which requires the growth of profits to keep or improve profitability.

In fact, many banks have been planning to raise capital, but most postponed plans due to the unfavourable stock market conditions. Since the VN-Index peaked in April 2018, the capital raising deals of banks or the listing of stocks have been coming along slowly.

Besides MBBank, BIDV also successfully staged a private placement of more than 603 million shares to KEB Hana Bank, collecting more than VND20 trillion ($869.57 million). While BIDV was looking for a strategic partner, MBBank investors are foreign funds.

The eight foreign shareholders participating in MBBank's latest private placement

No

Investor name

Shareholding before the placement

Shareholding after the placement

Ownership rate after the placement (per cent)

1

Fiera Capital Emerging Markets Fund

5,125,000

20,500,000

0.841

2

Franklin Templeton Investment Funds –Templeton Frontier Markets Fund

1,335,731

5,342,930

0.219

3

KIM Vietnam Growth Equity Fund

7,998,171

31,992,683

1.313

4

TMAM Vietnam Equity Mother Fund

4,789,645

15,649,779

0.642

5

KITMC Worldwide Vietnam RSP Balance Fund

8,051,924

10,702,974

0.439

6

Vietnam Growth Stock Income Mother Fund

15,635,748

19,347,091

0.794

7

Swiftcurrent Partners, LP

680,413

2,721,652

0.112

8

Swiftcurrent Offshore, Master LTD

5056,702

2,226,806

0.091

Sum

44,173,334

64,310,581

4.451

By Thuy Duong

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