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OTC shares attract eye of institutional investors

HA NOI – Institutional investors are eyeing more unlisted stocks despite many OTC stocks seeing inactive trading.

According to Dau tu chung khoan (Securities Investment) newspaper, Ha Noi Building Bank has finalised the purchase of a 5-per-cent stake in Binh An Seafood Company.

The bank will help the company improve its corporate governance and develop its business strategy.

MBCapital's director of business development Truong Thi Huong Tra said that its subfund MP Japan Asia Fund was seeking opportunities with unlisted companies worth up to US$10-20 million. The companies also had to be financially transparent with a need to increase charter capital.

Tra said that the fund was currently in investment negotiations with a number of OTC companies.

She said many small and medium-sized enterprises had good track records but still faced difficulties in raising capital from investment funds or had trouble accessing banking loans.

Meanwhile, Dang Thi Minh Loan, deputy managing director of VinaCapital, told Dau tu chung khoan that the fund had about $20 to 50 million in cash and planned to give priority to investing in unlisted companies with proven potential for growth.

John Nolan, an HCM City-based management fund analyst, said that institutional investors were interested in unlisted firms because those companies' share prices were lower than their real value.

"I have found that many unlisted firms have a lot of potential which hasn't been exploited yet due to a shortage of capital," Nolan said.

At the same times, companies being traded in the OTC market weren't governed by the same strict disclosure rules. This made it difficult for investors to realise an unlisted company's potential without a lot of effort, he added.

"The opportunities from listed companies appear smaller," he said.

Do Doan Kien, representative of Aureos Capital – the founder of Aureos Southeast Asia Fund – said that Viet Nam was a developing country, which meant that the country's enterprises had a lot of potential.

Kien said that the fund was in negotiation with several local companies and their 5- to 7-year investment period could begin in the first quarter of next year.

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