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A unit of Thailand’s Thai Beverage has emerged as the sole company to bid for a stake in Sabeco, Vietnam’s biggest beer producer, marking an underwhelming response to the Southeast Asian country’s biggest and most closely watched privatisation this year.

The privatisation of Sabeco has been almost a decade in the making, hitting a number of setbacks and changes to the way the deal was structured. But it has also been held up as a prime example of how Vietnam plans to introduce private and foreign shareholders into state-backed groups.

The website of Vietnam’s trade ministry listed the Thai company as the only one to register for the sale of a stake of at least 25 per cent in the brewing company, the deadline for which was on Monday. International brewing giants, including InBev and Kirin, expressed preliminary interest in the sale but did not make bids.

The bid by ThaiBev, which is owned by billionaire Charoen Sirivadhanabhadki, would mark the latest foreign investment by a Thai company looking abroad for faster market growth and for lower-wage production than in its home market. The Thai company did not comment on its bid.

A 25 per cent stake in Sabeco would be worth about $2.3bn based on the Vietnamese government’s initial offer price of 320,000 dong ($14) per share. Vietnam is selling a stake of up to 53 per cent of Sabeco, which is based in Ho Chi Minh City, and is the dominant brewer in a nation of 92m people where consumption of beer is expanding rapidly.

However, the turnout for the auction highlighted the difficulties faced by Vietnamese reformers seeking to privatise state industry to raise cash. The process, which Vietnamese reformers call “equitisation”, has been slow.

Because of Vietnam’s misgivings about ceding management control to foreigners, many of the country’s largest companies have brought to market only small equity stakes, a strategy that critics say will not shake up incumbent state-guided managers.

Rules published by the government in November said that foreign ownership in Sabeco was limited to 49 per cent. With foreign shareholders including Heineken already holding 10 per cent, the current stake sale would allow a foreign buyer to take just under 39 per cent, leaving Vietnamese shareholders with majority control.

Vietnam is aiming to raise at least $4.8bn from the transaction. Sabeco’s share price has surged by almost 59 per cent this year, in keeping with rising prices on Vietnam’s overall equities market.

“There were a number of interested parties, but the complexity of the structure as well as the price may have been off-putting for other potential bidders,” said Fiachra MacCana, head of research at HSC, Vietnam’s second-largest brokerage by market capitalisation.

People close to the auction said potential buyers of the stake were deterred from bidding by cumbersome requirements around the auction and the short window of time allotted to it. “The bottom line is that all bidders were given 20 days to do a $5bn transaction,” said an adviser to one of the bidders that dropped out, who asked not to be named.

Vietnam is expected to sell a stake in Hanoi Beer Alcohol & Beverage or Habeco, the country’s second-largest brewing group, in 2018.

By John Reed & Don Weinland - The Financial Times - December 12, 2017