BIDV Insurance, the non-life insurance arm of BIDV, has made an embarrassing start by hitting the floor for two straight sessions after its debut.
The sixth-largest non-life insurance firm, known as BIC, floated its 66 million shares at an opening price of VND11,500 on Tuesday, September 6. The stock tumbled 20 per cent, the lowest limit for a first listing day on the Ho Chi Minh Stock Exchange (HoSE), to close at VND9,200 on its debut and hit floor again, dropping 4.3 per cent, in the following session.
Trading volume hit lows of 80,000 units and 40,000 respectively.
BIC’s fall was in line with the non-life insurance sector since the middle of this year, with inside firms struggling with reducing demand and solvency of their clients, mainly enterprises, given economic difficulties.
Pham Quang Tung, general director for BIC, said the firm listed its shares “despite an unfavourable market situation” due to a commitment with shareholders since early this year, in attempt to increase the share’s liquidity.
Tung said his company would focus on seeking a foreign strategic partner after the listing. The firm planned to raise its capital through a new shares issuance of 20 per cent stake.
BIC’s revenue advanced 22 per cent within the first eight months of 2011 to VND644.8 billion. Before-tax profit of the same period soared 92 per cent to VND60.1 billion, but making up just 60 per cent the annual profit target.
Tung, however, said that the firm would lower its annual profit plan.