Vietnam’s Airports Corporation nationalised: Groupe ADP deal scuttled

Vietnam is one of several countries in Southeast Asia where, on the surface at least, it appears as if the government is keen to attract both domestic and foreign investors to its airports portfolio. That appearance might be a little misleading, though.

Aéroports de Paris, which then became Groupe ADP in 2017, looked to tie up a deal with ACV whereby Groupe ADP would acquire a 7.4% equity stake (later 20%) in ACV and make long term investments there. The government approved the deal but it was then stalled by both ACV and Groupe ADP owing to multiple disagreements.

The Vietnamese government currently owns 95.39% of Airports Corporation of Vietnam (ACV), with the remaining 4.61% held by both local and foreign investors. Now, while Ministers are saying that they still welcome investment, the government is proposing to buy back the few shares in ACV not owned by the state, thus effectively nationalising it.

Vietnam‘s Ministry of Transport has proposed buying back all non-state-owned shares in Airports Corporation of Vietnam (ACV) to return the airport operator to 100% state ownership.

In fact, it is almost there already. The Vietnamese government currently owns 95.39% of ACV, with the remaining 4.61% held by both local and foreign investors. The Ministry has said that making ACV a wholly state-owned enterprise would ensure higher standards in aviation security, which hints bizarrely at a problem with the minority investors.

ACV operates under a parent company-subsidiaries model, managing 22 airports nationwide, of which seven are international airports.

Vietnam is one of several Southeast Asian countries that are coming to terms with the need to improve their airport infrastructure while at the same time grappling with what has become almost the metaphysical concept: whether or not their airports should be under public or private control.

If Vietnam was seriously seeking to attract private capital, even the closing of four and a half per cent of its share capital back to the state sends out a peculiar message.

One problem has been that in Southeast Asia generally western hemisphere investors remain disinclined to venture outside their comfort zone, and participation in purchases and concessions tends to be made by local companies.

There are a few exceptions and one of them is France’s Groupe ADP’s interest in ACV, but that fell through over various disagreements. A domestic IPO on the Airports Corporation of Vietnam closed in Dec-2015, raising approximately USD50 million. The corporation then went on to seek a strategic investor with the intention of listing further on the Hanoi Stock Exchange.

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