Realty firms seek fund via share issuance
By Dinh Dung - The Saigon Times Daily
HCMC – Local cash-strapped property companies have strong expectations on new share issuance as a way to mobilize capital from the improving stock market after the central bank’s announcement to loosen realty loans recently.
Like other securities, prices of the real estate stocks have constantly shrunk in line with dampened confidence among investors over the past year, dragging down the market capitalization of many realty enterprises.
Many realty firms have failed to lure funds from issuing shares to investors due to the stagnant economy and unfavorable stock market, with their stock prices falling below the face value in some cases.
Eximland was unable to become a listed entity as scheduled given tough times last year. The developer asserted in this year’s general shareholders’ meeting that it would continue considering an appropriate time for listing its shares on the Hanoi Stock Exchange (HNX) within the year.
Similarly, Phat Dat Property Development Corporation in 2011 considered issuing 18 million shares to strategic partners as the first option or under the format of depository certificates in the another option. At last, the business had no choice but to give up both plans because of the gloomy stock market.
To replenish business capital, the company intends to continue pursuing the fund mobilization bringing about an additional VND180 billion if successful.
Also with the purpose to seek working capital for business activities, Van Phat Hung JSC is outlining a VND300-billion separate convertible bond issuance scheme with terms of one to three years.
The current increase in property stock prices will improve potential development of these entities, thus helping them entice investors to buy newly-issued securities more easily, said chairman Tran Minh Hoang of Vinaland.
A lot of developers are focusing on seeking capital via bond and share issuance channels in an effort to remedy investment fund shortages they are facing, Hong noted.