IPO is an economical term standing for Initial Public Offering in which a company sells its shares to the general public for the first time. Under the plan of equitisation of State enterprises, Vietnam Airlines intends to perform its IPO in September 2014. After IPO, the State shareholders will still retain 70 to 80 percent of the total capital of this carrier.
Mr. Pham Ngoc Minh, this airline's CEO stated that the entrepreneur determined its business value and reported to the Ministry of Transport. In early March, the Ministry of Transport also submitted to the Prime Minister. The management of Vietnam airlines is now waiting for the approval of the Government’s Office in the next few days. The business value of Vietnam Airlines is evaluated by 2 methods. According to the book value, up to March 31st 2013, the corporation had 57,156 billion VND in assets, equivalent to 2.744 billion USD, of which the State capital was 10,567 billion VND, equivalent to 507 million USD. In addition to the figure based on book value, the management also hired professional foreign consultants to determine the value according to international standards. This result reported that the value of Vietnam Airlines was 57,047 billion dong, equivalent to 2.74 billion USD. However, the State capital accounted for up to 23,493 billion dong or 1.128 billion USD.
Determining the value of an enterprise is considered to be the key step in the process of IPO. At the Government’s regular meeting, the Minister of Transport has recommended the Prime Minister to ratify the evaluation result soon for the carrier to complete the detailed plan of IPO. This detailed plan is expected to submit in May 2014. The parent company will certainly do IPO and hold a shareholders’ meeting in the second half of 2014. If all processes go smoothly as intended, the equitisation of Vietnam Airline is performed in September 2014.
According to Vietnam Airlines news, its total revenue in 2013 was 72.6 trillion VND, equivalent to 3.4 billion USD. The carrier also earned a pre-tax profit of 25.3 million USD. Nowadays, although there are some large foreign airlines investing in Vietnam market, it is still the leading and largest enterprise in aviation business of Vietnam. The IPO of Vietnam Airlines will be the first aviation equitisation in the Southeast Asian countries. Therefore, it makes the value determination process more challenging.