A lot of investors, including foreigners, want to buy securities companies, even firms that are obscure and do little business, just as long as they have an operating license.
In 2007, a record number of new securities companies were established. Then, in early 2008, the State Securities Commission slammed the door shut. It has not granted operating licenses to any more brokerages because it is still pondering what requirements to set. Thus, investors who want to own a securities company have only one recourse: Buying an existing company.
One hundred securities companies are competing fiercely with each other in the Vietnamese market for brokerage and investment consultancy business.
Song, an investor, has advertised that he needs to buy a securities company with capital of 35-40 billion dong and a license to provide brokerage and consultancy services.
Song said that he needs to purchase at least 40 percent of stakes of such a company. “It would be best if the partner agrees to sell all his stake. If not, the two sides can sit together to discuss development strategy and the company management plan,” Song said.
Shares of many securities companies are being traded at little more than the minimum 10,000 dong per share. However, many investors say they are ready to pay higher prices if they can buy large blocks of shares.
According to Phan Xuan Can, General Director of Tiger Invest, the securities company market is now a sellers’ market. In 2008 and 2009, when the stock market performed badly and securities companies fell into a deep hole, many brokerages were offered for sale. The situation is quite different now. In particular, the stock market is stable and the watchdog agency is not granting new licenses. Investors that want to own their own securities companies have no choice but to buy stakes of existing companies
Can said that Tiger Invest has managed such deals. He said that when valuing securities companies, the biggest problem is valuing the securities that the companies hold.
In some prominent cases, the buyers have been foreign investors.
Under Vietnam’s WTO commitments, by 2012 it must allow foreigners to own 100 percent of financial services firms. In anticipation of that time, many foreign financial institutions seem intent on buying stakes in domestic securities companies. The former Bien Viet Securities Company is an example. After three years of operation, in November 2009, the company was officially renamed Woori CBV after the Korean firm, Woori Investment and Securities Company, bought a 49 percent share.
Hoa Anh Dao Securities Company is another example. In January 2009, it obtained its license with chartered capital of 41 billion dong and the legal capital of 35 billion dong. The founding shareholder of the securities company was Viglacera. However, in April 2009, the company became Japan Securities Company after a Japanese partner purchased Hoa Anh Dao.
These weren’t the first instances where foreign investors bought stakes of domestic securities companies. Technology CX, a Cayman Islands-registered company, bought 49 percent of Au Lac Securities, Malaysia’s RHB Bank bought 49 percent of stakes of Vietnam Securities Company for 67 billion dong, and Golden Bridge, another Korean financial firm, bought 6.615 million shares (49 percent) of Click & Phone Securities.