Waiting for a boost in the IPO market

In 2024, the IPO (initial public offering) market witnessed a necessary slowdown to prepare for stronger and more robust acceleration in 2025.

Mr. Bui Van Trinh, Deputy General Director of Assurance Services at Deloitte Vietnam, shared optimistic expectations and hopes for a breakthrough in the Vietnamese market in general and IPO activities in particular.

Mr. Bui Van Trinh, Deputy General Director of Assurance Services, Deloitte Vietnam

The Vietnamese IPO market experienced a lackluster 2024 with only one successful deal. Looking ahead to 2025, what factors suggest the prospect of more successful IPOs for investors?

We remain optimistic about the stability and acceleration of the market. This optimism stems from GDP growth, market recovery, policy changes, and foreign investment.

First, Vietnam's GDP is projected to maintain stable growth and could reach 7% according to HSBC's forecast or 6.5% according to the World Bank. Based on the latest overall assessment of Southeast Asian countries, Vietnam is also considered a leader in growth rate in the region, regardless of which of the two scenarios occurs.

Secondly, the real estate sector, one of the key sectors of the economy, is showing strong signs of recovery after a series of support measures from regulatory agencies. It is expected that in the coming year, this sector may boost demand for capital mobilization through various channels, including the stock market.

Thirdly, many government policies adopted in 2024 focus on economic development and investment environment reform. These factors, aimed at increasing public investment, achieving the goal of upgrading the stock market, and reaching GDP growth of 7-7.5% in 2025, will open opportunities for businesses, especially new businesses wishing to list on the stock market.

Finally, foreign direct investment (FDI) into Vietnam is expected to continue increasing. This is driven by economic growth, thanks to the return of many foreign investors seeking to capitalize on the wave of profit growth as the market is upgraded and the economy accelerates compared to other investment markets such as China.

The Vietnamese stock market is expected to be upgraded in 2025. Photo : Duc Thanh

According to him, which IPOs in which sectors are worth waiting for by investors in the near future?

Vietnam's economic growth in this period and in the near future will not come solely from one or two specific industries, but will be a collective effort from public investment, domestic investment, and foreign investment. Opportunities are scattered across many sectors and also depend on several macroeconomic factors beyond our control, making it difficult to specifically identify which sectors will be the most promising candidates for investors. However, if we consider the broader sectors, we believe there are several options that investors can consider.

We observed a diverse range of assessments among businesses and investors when identifying sectors with high growth potential in 2025. According to the Vietnam Report, conducted with the top 500 Vietnamese companies in October 2024, information technology and telecommunications, transportation and logistics, and electricity and energy were the most popular choices.

Meanwhile, according to Vina Capital Investment Fund, the three sectors that will lead in growth in 2025 are real estate, construction materials, and consumer goods. Overall, these are all sectors that will receive attention and benefit from the government's policy of increasing budget spending and public investment to boost the economy in the coming period.

We also observe that certain niche sectors such as chip manufacturing, semiconductor technology, artificial intelligence (AI), and renewable energy are receiving significant attention and support from the government and have been trending investments in countries like the US and South Korea in recent years.

These sectors may not experience dramatic changes in the short term, but significant breakthroughs are expected in the future, driving growth in supporting products and services. Simultaneously, this will serve as a springboard for businesses to leverage the integration of modern technology into traditional operating models such as retail or online commerce.

What areas does Vietnam need to improve to boost IPOs and strengthen investor confidence?

The Vietnamese market is chosen as a preferred investment environment for investors due to several factors. These include well-controlled inflation, relatively abundant credit, and strong public policy reforms to attract investment. Building on this favorable foundation, to give businesses a boost when conducting IPOs and to strengthen investor confidence in the Vietnamese market, we believe that efforts are needed not only from regulatory bodies but also from the businesses themselves.

How have the efforts of the regulatory authorities over the past year been recognized by foreign investors and organizations, sir?

Regarding economic policy, in recent years, the government has continuously adopted numerous initiatives and changes with the determination to boost economic growth and upgrade the stock market.

Specifically, Decree No. 60/2015/ND-CP abolishes the limit on the ownership ratio of foreign investors in certain sectors; Circular No. 68/2024/TT-BTC adds regulations allowing foreign investors that are organizations established under foreign law to purchase shares without requiring them to have sufficient funds at the time of placing the order.

In addition, the amended Accounting Law has been passed, allowing the Ministry of Finance to prescribe accounting standards based on international accounting standards that are suitable to the specific conditions of Vietnam, and to provide guidance on the subjects, scope, format, roadmap, and other contents related to the application of international accounting standards.

At the Bloomberg Businessweek Vietnam conference held in Ho Chi Minh City in December 2014, representatives from FTSE Russell stated that they would conduct an assessment of Vietnam within the next 6-9 months, focusing on examining the real-world experiences of international investors.

Currently, Vietnam has not met two of the nine FTSE Russell upgrade criteria related to margin requirements, which allow securities companies to accept buy orders from foreign institutional investors even if the account does not have 100% of the order value, and handling failed transactions. However, with many changes in procedures and regulations, a quick survey at the conference showed that 68% of participating businesses believe that the Vietnamese stock market will soon be upgraded in 2025.

Therefore, if regulatory agencies continue to take decisive and timely actions to address the difficulties faced by businesses, create favorable conditions for foreign investors to participate in the market, and improve the quality of stock market operations, we can certainly hope for much more impressive figures regarding capital inflows into Vietnam.

In your opinion, what is the first step a company needs to take to have a successful IPO for both investors and the business?

It involves assessing the current situation, then developing a reasonable and appropriate roadmap so that the business can benefit from the entire journey in terms of management, people, processes, and systems, without losing the core values that define the business.

When determining the timing of an IPO, businesses must consider both macroeconomic factors and their own readiness to achieve a reasonable and optimal valuation. An IPO, or becoming a public company, is really just the first step or milestone on a long journey ahead, and should not be considered, or even the ultimate destination.

We have observed that, while previously only a small group of leading large enterprises were interested in building internal governance and control mechanisms in accordance with international best practices to meet the expectations of foreign investors and strategic partners, the number of Vietnamese enterprises implementing this work has now increased significantly.

Besides a business model that delivers good growth rates or high profit margins, a corporate governance mechanism that emphasizes transparency, a risk management policy that is established and applied consistently, and complete and honest financial information are also key factors that many investors consider before investing in a partnership.

Given what has happened and is happening, we are very optimistic and expect a breakthrough for the Vietnamese market in general and IPO activity in particular in 2025.

Source: https://baodautu.vn/cho-cu-huych-tren-thi-truong-ipo-d237522.html