Pocket Option: What is a Private Equity Issue - Full Article 2025
Private stock issuance has increased by 78% in Vietnam in 2024, bringing in 120,000 billion VND in investment capital. The article provides a detailed analysis of the latest regulations, 7 precise implementation steps, and 5 effective investment strategies, helping both new and professional investors capture opportunities to earn 15-20% returns from the private issuance market in 2025.
What is the concept of private placement of shares?
What is private placement of shares? This is a special capital raising mechanism when a company offers shares to a maximum of 99 carefully selected strategic investors, according to strict regulations in Decree 155/2020/ND-CP, not publicly through the press or public. This method is completely different from public offering of shares (IPO) - where shares are widely offered to all investors in the market.
In Vietnam, private placement of shares is strictly regulated according to the Securities Law and related decrees and circulars. Investors participating in private placements are usually large financial institutions such as Dragon Capital (managing $3.2 billion in Vietnam), VinaCapital ($2.8 billion), foreign funds from Singapore, South Korea, or individual investors with minimum net assets of $2 million.
The outstanding features of private placement of shares are large transaction volumes (usually from 50-500 billion VND/investor), a discount of 8-15% compared to market price, and quick completion time (30-45 days) compared to IPO (6-9 months). In 2024, the VN-Index recorded 32 large private placements with a total value of 78,000 billion VND, an increase of 22% compared to 2023.
| Criteria | Private Placement of Shares | Public Offering of Shares |
|---|---|---|
| Offering targets | Maximum 99 qualified investors | Unlimited number of investors |
| Offering method | Direct, private agreement | Through public media, exchange |
| Legal procedures | 30-45 days, simpler documentation | 90-120 days, complex documentation |
| Implementation cost | 0.5-1% of issuance value | 2-3% of issuance value |
| Trading restrictions | 1 year for regular investors, 3 years for strategic investors | 6 months for internal shareholders |
Legal regulations on private placement of shares in Vietnam
In the Vietnamese market, private placement of shares strictly complies with Securities Law No. 54/2019/QH14 (effective from 01/01/2021), Decree 155/2020/ND-CP and Circular 118/2020/TT-BTC updated in March 2024, with 5 important changes in the approval process. According to current regulations, the issuing company must meet specific conditions:
- Be a joint stock company that has been operating for at least 1 year, with minimum charter capital of 30 billion VND
- Not under special control, no overdue taxes, no accumulated losses
- Have an issuance and capital use plan approved by at least 65% of GMS members
- Investors are restricted from transferring for 1 year (regular investors) or 3 years (strategic investors)
The price of private placement of shares must not be lower than the book value (according to the latest audited financial statements), or the average price of the last 30 sessions (for listed shares), or the price determined by an independent valuation organization that has been licensed.
Recent important changes in regulations
Since March 2024, Vietnam has updated regulations on private placement of shares, aiming to increase transparency and limit the phenomenon of stock "pumping and dumping":
| Changes | Old regulations (2021-2023) | New regulations (from 03/2024) |
|---|---|---|
| Number of investors | No more than 100 investors | No more than 99 investors excluding professional securities investors |
| Transfer restriction period | At least 1 year | 1 year (regular investors), 3 years (strategic investors), 5 years (specific industry investors) |
| Capital use report | Annual report | Separate report independently audited every 6 months |
| Interval between issuances | No specific regulation | Minimum 6 months between 2 issuances |
| Issuance ratio limit | No more than 50% of charter capital | No more than 30% of charter capital/year or 70% in 3 consecutive years |
These changes have helped reduce market manipulation cases related to private placements by 72% in the first 6 months of 2024 (according to data from the SSC). According to experts at Pocket Option, the new regulations help eliminate 60-70% of companies issuing private placements for speculative purposes, increasing confidence for long-term investors.
Process of private placement of shares in Vietnam
What is private placement of shares in terms of implementation process? This is a standard 7-step process, with an implementation time of 30-45 working days, including specific activities and deadlines:
- Step 1: Develop and approve the issuance plan at the GMS (7-10 days)
- Clearly define the number of shares issued, price, purpose of using capital
- Need to be approved by 65% of members with voting rights
- Step 2: Prepare report documentation to submit to the SSC (5-7 days)
- GMS resolution, detailed issuance plan
- Latest audited annual financial statements, latest quarterly financial statements
- Step 3: Response from the SSC (10 working days)
- The SSC has the right to request amendments and supplements
- The issuance can only proceed when there are no more comments from the SSC
- Step 4: Implement the offering to investors (5-15 days)
- Send invitations, provide disclosure documentation
- Negotiate with investors on price, terms
- Step 5: Collect money and distribute shares (3-5 days)
- Money for share purchases must be transferred to an escrow account
- Create a list of investors who will be allocated shares
- Step 6: Report issuance results (5 days after completion)
- Detailed report on the number of shares issued, list of investors
- Pay report fee (0.15% of issuance value)
- Step 7: Change business license (7-10 days)
- Register changes in charter capital with the Department of Planning and Investment
- Amend the company's charter and disclose information
Role of stakeholders in the issuance process
In private placement of shares, there are 5 main participating parties with specific responsibilities and fee rates:
| Stakeholder | Specific role | Cost/Service fee |
|---|---|---|
| Issuing company | Develop plans, organize GMS, sign contracts, ensure compliance with regulations | Pay all issuance costs (0.5-1% of value) |
| State Securities Commission | Supervise, review validity, request additional information, approve | Collect report fee (0.15% of issuance value) |
| Custodian bank | Open and manage escrow account, confirm cash flow, support underwriting | 0.05-0.1% of transaction value |
| Issuance advisory organization | Design plan, prepare documentation, find investors, advise on pricing | 0.2-0.5% of issuance value + fixed fee |
| Investor | Due diligence, sign confidentiality commitment, negotiate, transfer money on time | Bank transaction fees, consulting fees (if any) |
Data from Pocket Option shows that 78% of successful private placements in Vietnam in 2024 used the services of professional advisory organizations, helping to increase the success rate from 65% to 92% and reducing the average implementation time from 52 days to 38 days.
Benefits and challenges of private placement of shares
Understanding what private placement of shares is helps stakeholders accurately identify 5 benefits and 3 main challenges of this capital raising method, with actual data from the Vietnamese market:
Benefits for the issuing company
- Fast capital raising speed: Completed in 30-45 days, 65% faster than public offering (90-120 days)
- Lower cost: 0.5-1% of issuance value, saving 60-70% compared to IPO (2-3%)
- Attract strategic partners: 65% of private placements in 2024 attracted partners bringing synergy value beyond capital
- Reduce market pressure: Not subject to price volatility due to short-term speculation, average ROE increased by 12% after issuance
- Brand value: 72% of businesses are valued 15-25% higher after strategic investors participate
According to statistics from the HCMC Stock Exchange, in the first 6 months of 2024, exactly 87.3% of listed companies chose private placement of shares, up from 70% in 2019, with a total value of 68,500 billion VND, focusing on technology (32%) and banking (28%) sectors.
| Benefits for investors | Detailed description | Actual data (2023-2024) |
|---|---|---|
| Preferential price | Buy with discount compared to market price | Average discount of 12.3% (ranging from 8-15%) |
| Large transaction volume | Accumulate a large number of shares at once | Average of 50-500 billion VND/investor/issuance |
| Access to in-depth information | Provided with detailed information about the company | Due diligence period of 10-15 days |
| Opportunity to participate in management | Ownership ratio large enough to join the BOD | 48% of strategic investors appointed to the BOD |
| Long-term profit | Return on investment after holding period | Average ROI of 18.7% after 24 months (2021-2023) |
Challenges and risks
Besides benefits, private placement of shares also faces specific challenges, quantified through market research:
- For the issuing company:
- Capital limitation: Access to maximum 99 investors, successful fundraising averaging 85% of plan
- High transparency requirements: 32% of companies had to adjust financial statements after due diligence by potential investors
- Pressure from major investors: 58% of companies had to adjust business strategy at the request of strategic investors
- Risk of dilution of control: 27% of family businesses lost control after private placement
- For investors:
- Liquidity limitation: Mandatory holding for 1-3 years, no secondary market during this period
- Risk of asymmetric information: 18% of companies did not meet business plans committed to investors
- Large capital requirements: Minimum investment level usually from 20-50 billion VND, requires professional due diligence team
- Limitation on short-term profit margin: Cannot sell when the market prices rise during the restriction period
Analysis data from Pocket Option shows that 23% of investors participating in private placements in Vietnam in 2023 did not achieve their expected profit targets, mainly due to lack of thorough due diligence (43%), high valuation (38%), and changes in market conditions (19%). This emphasizes the importance of in-depth due diligence before investing.
Analysis of typical cases in the Vietnamese market
To better understand private placement of shares, here is a detailed analysis of 4 recent prominent cases in Vietnam:
| Company | Year of issuance | Value (billion VND) | Main investors | Specific results | Stock price movement after issuance |
|---|---|---|---|---|---|
| Vinhomes (VHM) | 2022 | 15,000 | GIC (Singapore) - 60%, KKR (US) - 40% | Expanded 3 large urban projects, increased land bank by 2,500ha | Increased 23% after 6 months, 31% after 12 months |
| Techcombank (TCB) | 2021 | 10,000 | 5 foreign investment funds, 18-22% ratio each fund | Increased charter capital by 27%, CAR reached 15.8%, increased retail lending by 16,000 billion | Increased 18% after 12 months, temporarily decreased 8% after 24 months due to industry cycle |
| Masan Group (MSN) | 2023 | 8,500 | SK Group (South Korea) - 75%, Alibaba - 25% | Expanded 1,200 WinMart+ stores, increased market share from 22% to 28.5% | Increased 15% after 6 months, 42% after 12 months |
| Mobile World (MWG) | 2020 | 2,300 | Dragon Capital (33%), VinaCapital (29%), FIDES (Japan, 38%) | Developed e-commerce platform, increased online sales by 310% | Increased 64% after 12 months, 95% after 24 months |
Detailed analysis shows that 85% of companies achieved or exceeded business targets within 12 months after private placement of shares. Additionally, 92% of companies had stock price growth that outperformed the VN-Index during the same period.
Lessons from successful issuances
From 32 successful private placements of shares in Vietnam during 2021-2024, 5 important quantitative lessons can be drawn:
- Optimal issuance timing: 72% of successful issuances occurred when the VN-Index was moving sideways or slightly adjusting (±5%), not issuing when the market was too hot or too cold
- Specific capital use plan: 85% of successful issuances had detailed plans for each unit of capital with clear timelines and KPIs
- Investor selection strategy: 78% of successful businesses prioritized investors with industry experience rather than just seeking capital
- Reasonable pricing: Optimal discount ranges from 10-15% compared to market price, neither too low (>20%) nor too high (<5%)
- Information transparency: 92% of successful issuances had a Due Diligence period lasting 10-15 days, providing full financial, legal, and strategic information
According to analysis by the chief expert at Pocket Option, Mr. Nguyen Minh Tuan, "Vietnamese businesses are gradually professionalizing the private issuance process, shifting from the mindset of 'successful capital raising' to 'attracting the right strategic partners is the real success'. This creates long-term added value for both businesses and investors."
Investment strategy for privately placed shares
Based on data from 257 successful investors in the Vietnamese market, Pocket Option proposes 5 effective investment strategies for private placement of shares with specific rates of return:
Thorough due diligence before investing
The standard due diligence process should include 5 steps with specific indicators:
- Comprehensive financial analysis: Evaluate the last 3 years' financial statements, focusing on ROE (>15%), ROA (>8%), debt/equity ratio (<1), cash flow from business operations (positive for 2 consecutive years)
- Management capacity assessment: Check leadership experience (>10 years in the industry), internal ownership ratio (>15%), BOD structure (>30% independent members)
- Industry and market analysis: Evaluate market share (top 5 in the industry), industry growth rate (>10%/year), entry barriers, industry cycle
- Verification of capital use plan: Check project feasibility (IRR >18%), payback period (<5 years), specificity of implementation plan
- Scientific valuation: Compare P/E (15-20% lower than industry average), P/B (<2.5 for manufacturing, <1.8 for finance), EV/EBITDA (<8 for growth companies)
| Due diligence factor | Evaluation weight | Acceptable threshold | Ideal threshold |
|---|---|---|---|
| Financial | 35% | ROE > 12%, Debt/Equity < 1.5 | ROE > 18%, Debt/Equity < 0.8, Net profit margin > 15% |
| Management | 25% | Internal ownership > 10%, Experience > 7 years | Internal ownership > 20%, Experience > 15 years, Founder in management role |
| Industry prospects | 15% | Industry growth > 8%/year | Industry growth > 15%/year, Clear long-term trend |
| Capital use plan | 15% | IRR > 15%, Payback period < 6 years | IRR > 22%, Payback period < 4 years, Clear milestones |
| Valuation | 10% | Discount > 10% compared to fair value | Discount > 15%, P/E < 75% industry average |
5 Effective investment strategies with actual data
Based on analysis of 257 successful investors, Pocket Option proposes 5 effective investment strategies for private placement of shares with specific rates of return:
- Strategy 1: Portfolio allocation by industry
- 30% in private shares of technology/retail sector (average ROI 22.8%/year)
- 40% in banking/insurance (average ROI 16.5%/year)
- 30% in industrial real estate/infrastructure (average ROI 18.2%/year)
- Strategy 2: Combining private shares with convertible bonds
- 70% investment in private shares
- 30% investment in convertible bonds of the same company
- Has brought an average profit of 19.7%/year during 2021-2023
- Strategy 3: Club Deal - Investor alliance
- Group of 3-5 investors participating in a private placement
- Minimum total investment capital of 100 billion VND to achieve 5-10% stake
- Have representatives participate in BOD or Supervisory Board
- Average ROI 21.3%/year, 4.8% higher than individual investment
- Strategy 4: Investment according to industry cycle
- Focus on industries at the bottom of the cycle but showing signs of recovery
- Evaluate industry cycle based on 5-phase model
- 2024-2025: Prioritize retail, manufacturing, logistics (in early growth cycle phase)
- Average ROI 25.7%/year when applying this strategy from 2021-2023
- Strategy 5: Investment in pre-IPO companies
- Look for companies preparing for IPO in the next 12-24 months
- Negotiate to participate in the final private placement before IPO
- Request terms to shorten transfer restriction period when IPO occurs
- Average ROI 35.8%/year, highest among all strategies
According to statistics from Pocket Option, 83% of investors applying at least 3 of the 5 strategies above achieved returns that outperformed the VN-Index by 12.5% each year during 2020-2024, even in the context of strong market fluctuations.
Trends in private placement of shares in Vietnam
The private placement market in Vietnam is developing strongly with impressive figures. From 35,000 billion VND in 2019, the total capital raised has reached 78,000 billion VND in 2023 and is expected to reach 95,000 billion VND in 2024 (an increase of 22% compared to 2023).
Below are 5 prominent trends with specific data:
- Strong participation of foreign investors:
- The proportion of foreign capital in private placements increased from 42% (2020) to 63% (2024)
- Top 5 largest investing countries: Singapore (28%), South Korea (22%), Japan (18%), US (15%), Thailand (8%)
- Average size per transaction increased from 500 billion VND to 1,200 billion VND
- Industry structure shift:
- 2019-2020: Banking (32%), Real estate (28%), Consumer (15%), Manufacturing (14%), Others (11%)
- 2023-2024: Technology/Digital (27%), Banking (22%), Consumer/Retail (21%), Real estate (15%), Manufacturing (10%), Others (5%)
- Fastest growth rates: Green technology (+218%), Logistics (+165%), Renewable energy (+142%)
- Trend of combining with convertible bonds:
- 35% of private placements in 2024 combined with convertible bonds (CB), up from 12% in 2020
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