Booming IPO market in Vietnam presents opportunities, risks

One of the newest players in this IPO surge is Hoa Phat Agriculture Development JSC, a subsidiary of steel giant Hoa Phat Group.

The company has submitted plans to go public, aiming to offer up to 30 million shares at a minimum price of VND11,887 (US$0.45) apiece.

The proceeds from the offering will be used to expand production and develop its farming system.

Meanwhile, VPBank Securities (VPBankS) was approved to issue up to 375 million shares, equivalent to 25 percent of its total outstanding shares.

After the IPO, the firm’s charter capital could soar from VND15 trillion ($568 million) to VND18.75 trillion ($710.7 million).

Another anticipated listing is that of Telecom Securities (TCBS), which is also drawing strong investor interest.

These three IPOs alone are expected to raise nearly VND16 trillion ($606 million).

Additional IPOs from VPS Securities JSC, KAFI Securities Corporation, and others are still in the pipeline, reflecting a scale not seen since the 2018 peak of $4.67 billion and far exceeding the 2019-24 period.

This IPO momentum is not just a reflection of favorable market conditions, but it is also being propelled by newly introduced policies.

Most notably, Decree 245 has shortened the timeline from IPO to listing from 90 days to just 30 days.

The new regulation also unifies IPO and listing procedures and mandates regular disclosures on capital use, enhancing transparency.

Another key reform is the removal of restrictions allowing public companies to set foreign ownership limits below the legal maximum.

The Vietnamese market could gain even more momentum as FTSE Russell is set to review the country’s classification for a potential upgrade to ‘emerging market’ from ‘frontier market’ status in October.

A promotion could trigger billions of U.S. dollars in foreign inflows, providing an additional boost for newly listed companies.

“The regulatory changes are effectively streamlining IPO processes and enabling more efficient capital raising,” the director of a securities company told Tuoi Tre (Youth) newspaper.

“It is also reigniting investment banking activities that have been dormant for years. Even real estate firms with legal project clearance can now access funding more easily,” he added.

Balancing opportunity and risk

Despite the optimism, many IPOs remain in the planning stage, with unclear strategies for capital deployment.

Raising thousands of billions of Vietnamese dong in a bullish, sentiment-driven market could also bring risks.

Tai, an individual investor, shared that he rarely buys pre-IPO shares.

“IPO stocks often take time to reflect their true value. Last year, the IPO stock of a securities firm took over a year before the share price surpassed its listing price,” he said.

Bui Van Huy, research director at FIDT Investment Consulting and Asset Management JSC, underlined that capital raising must align with business performance.

“If a company merely rides the market wave without actually improving operations, the risk ultimately falls on investors," Huy said.

“Even within the securities sector, firms will risk ROE (Return on Equity) dilution if capital is not deployed efficiently."

IPOs and capital increases remain vital tools for strengthening corporate resources and promoting transparency.

However, their success hinges not only on internal business fundamentals but also on broader market conditions.

In a bullish market, investors often overlook valuation fundamentals, but this can lead to costly mistakes.

Each investor must assess risks, thoroughly evaluate the issuer's business strength, consider valuation rationales, and monitor capital deployment post-IPO.

Only by doing so can the current IPO wave deliver sustainable value instead of becoming a source of financial peril.

In a recent IPO, TCBS recorded over 26,000 successful investor registrations, with total shares reaching more than 575.16 million, 2.5 times the offering size of 231.15 million shares.

While the offering occurred during a market upswing, some investors are now expressing concern as sentiment shows signs of weakening.