Time for securities firms to raise charter capital

A VNDirect employee talking to a customer. — VNA/VNS Photo

Many securities companies are planning to raise capital through forms such as pidend payment, purchase rights and private offerings to meet the growth of the stock market.

The Board of Directors of SSI Securities Corporation (SSI) has just issued a resolution to submit to the General Meeting of Shareholders a plan to increase charter capital to nearly VNĐ15 trillion (US$661.4 million) through share offerings to existing shareholders.

Accordingly, the securities firm plans to offer about 497.4 million new shares to existing shareholders, with a ratio of 2:1 and offering price of VNĐ15,000 per share. The total offering value at maximum par value is approximately VNĐ4.97 trillion. Existing shareholders have the right to transfer their rights to buy shares to others within a specified time.

In September, SSI issued nearly 218.3 million shares to increase capital from owner's equity and offered more than 109.55 million shares to existing shareholders. Thereby, the company’s charter capital rose to nearly VNĐ9.85 trillion.

With the new resolution, if the issuance is completed, its charter capital will reach nearly VNĐ15 trillion, continuing to maintain SSI's position as the largest securities company in Việt Nam.

A representative of SSI said that the rise in charter capital is to supplement business capital, improve underwriting capacity, investment capacity and margin lending capacity. During the time when there are no margin lending transactions, the money will be used to invest in bonds and certificates of deposit to ensure efficient use of capital.

Also during the period, Yuanta Securities Vietnam Company Limited (YSVN) has just been approved by the State Securities Commission (SSC) to increase its charter capital from VNĐ1.5 trillion to VNĐ2 trillion.

Nguyễn Thanh Tùng, general director of YSVN, said that higher charter capital will help YSVN increase its capacity to provide more margin loans. It will also increase investment in technology, upgrade systems, improve processes, hire more employees, conduct domestic and foreign training and develop new products to bring the best experience to customers.

The document expected to be submitted to the 2021 Extraordinary General Meeting of Shareholders next month of VNDirect Securities Corporation also said that its Board of Directors will submit to the General Meeting of Shareholders for approval an offering plan of nearly 435 million shares to existing shareholders with a ratio of 1:1 and the offering price equal to the par value of VNĐ10,000 share.

According to the plan, VNDirect will use 40 per cent of the fund to supplement capital for margin lending activities, while the rest is for investment in valuable papers, underwriting securities activities, supplementing capital for issuance and distribution of covered warrants.

VNDirect's Board of Directors will also submit a plan to issue nearly 348 million shares to increase capital from equity sources (bonus shares) with the expected rate of 80 per cent, meaning shareholders with 100 shares will be entitled to receive 80 new shares.

With these two issuances, the charter capital of VNDirect can edge to more than VNĐ12 trillion. The execution time is in 2021 or 2022.

Many other securities companies also have significant capital increase plans at this time.

Preliminary statistics showed that more than 30 securities companies have plans to raise capital in 2021, mainly through forms like paying pidends, purchase rights, and private offerings.

YSVN said that the stock market is witnessing a historic boom in both liquidity and trading value, becoming the most wanted investment channel. Just in the first ten months of 2021, there were more than one million new brokerage accounts opened, which was the highest figure in history.

The rapid increase in the number of accounts and positive movements of the market have boosted demand for margin loans.

However, due to tight capital sources and regulations on the ceiling of outstanding loans for the activity, many securities companies have not been able to meet investors' demand.

Therefore, YSVN believes that these raising charter capital plans are made at the right time, helping companies to increase margin lending, serving the rising capital demand.

Abundant capital will also improve the profit outlook of securities companies.

In the first nine months of this year, income from margin lending, brokerage and proprietary trading of securities companies climbed dramatically compared to the same period last year, helping many securities companies reach their profit plans for the whole year of 2021 three months ahead of scheduled. — VNS