Mizuho Financial Group Inc. (8411) is in final talks to buy a stake in Vietnam’s largest publicly traded bank for as much as 60 billion yen ($760 million), said a person with knowledge of the discussions.
A unit of Mizuho, Japan’s third-biggest bank by market value, aims to acquire as much as 20 percent of Joint-Stock Commercial Bank for Foreign Trade of Vietnam by end of next month, the person said on condition of anonymity before a deal is struck. That would be the biggest purchase of a stake in a Vietnamese company, according to data compiled by Bloomberg.
Foreign banks are investing in Vietnam to tap demand for credit in the Asian nation even as it struggles to contain the region’s steepest inflation, restrain lending growth and trim the budget deficit. Commonwealth Bank of Australia (CBA) and Singapore’s United Overseas Bank Ltd. (UOB) won approval to raise their stakes in Vietnamese banks earlier this month.
Vietnam is “one of the last frontiers in Asia in terms of where you still have strong organic growth potentially over the next 20 years,” said Fiachra MacCana, managing director of Ho Chi Minh City Securities Corp. The country’s banks are becoming investment targets because their valuations have “come down to quite reasonable levels,” he said.
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Masako Shiono, a spokeswoman for Mizuho, declined to comment. Phone calls to Chairman Nguyen Hoa Binh and Chief Executive Officer Nguyen Phuoc Thanh at the Hanoi-based lender, known as Vietcombank, weren’t immediately answered. The Wall Street Journal earlier reported that Mizuho Corporate Bank Ltd. is the preferred bidder to take a 15 percent stake for about $500 million.
The $760 million valuation for 20 percent of Vietcombank would imply paying a 44 percent premium over the $528 million value of the stake at yesterday’s closing price, according to Bloomberg data. That would be Tokyo-based Mizuho’s biggest investment in a foreign company since it bought a stake in Merrill Lynch & Co. for $1.2 billion in 2008.
Vietcombank climbed 3.3 percent to 28,500 dong at 10:47 a.m. on the Ho Chi Minh City Stock Exchange, paring this year’s decline to 1.8 percent. Mizuho gained 0.8 percent to 129 yen on the Tokyo Stock Exchange.
The Japanese bank and bigger rivals Sumitomo Mitsui Financial Group Inc. and Mitsubishi UFJ Financial Group Inc. are expanding in Asia as falling prices and an aging population cause lending to shrink at home.
Mitsubishi UFJ said last month it plans to strengthen its capital alliance with CIMB Group Holdings Bhd., Malaysia’s second-biggest banking group. Sumitomo Mitsui is the largest shareholder in Vietnam Export-Import Commercial Joint Stock Bank with a 15 percent stake, according to data compiled by Bloomberg.
Vietcombank, the country’s biggest publicly traded lender by market value, said on May 17 it is reviving plans to sell as much as a 20 percent stake to overseas investors by early next year. The state-controlled bank first sold shares to outside investors in 2007 before listing two years later.
Vietnamese policy makers are grappling with how to slow Asia’s fastest inflation rate while sustaining economic growth. The State Bank of Vietnam this month cut a key interest rate even after consumer prices rose 20.8 percent in June from a year earlier, the most since November 2008.
Sydney-based Commonwealth Bank got permission to increase its holding in Vietnam International Commercial Joint-Stock Bank, known as VIB, to the 20 percent limit from 15 percent, the central bank said on July 11. UOB will be able to raise its stake in Southern Commercial Joint-Stock Bank to a similar level.
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