Public equity is a better funding alternative than bank loans and bonds, according to a financial expert speaking at a seminar on Friday in HCM City.
Kelly Yin Hon Wong, Managing Director of HCM City Securities Corporation (HSO) 's Investment Banking Department, said although public equity requires strict reporting and disclosure, it facilitates acquisitions and partnerships, and creates multiple financing opportunities, including equity and convertible debt.
The seminar addressed solutions to access sources of capital efficiency.
Wong said that Viet Nam was a high-growth but small-scale market, and showed an increasing competitiveness for capital but had limited long-term funding sources.
HSO is a Viet Nam – based provider of investment services, offering securities brokerage services to institutional and individual investors.
Bank loans appear to be a safe but are not a long-term cash solution.
Wong said that if credit history was not good, a company may not have access to bank loans or must pay very high interest rates even if the company is unprofitable.
Private equity is considered the most expensive source of capital, with a limited amount of capital to access, while bonds are still under development in Viet Nam, according to Wong.
He said Viet Nam companies should create better financial growth plans and operation plans, and broaden their sources of capital.
Investors are looking for companies with strong management and customer service, he noted.
Mezzanine funds
Tran Le Khanh, Chief investment officer for Prudential Viet Nam Management Company, said: "We focus on mezzanine funds, a hybrid of debt and equity financing, because it offers lenders an acceptable safe level, and has an upside potential."
Mezzanine is typically used to finance the expansion of existing companies, Khanh explained.
This kind of financing gives lenders the rights to convert to an ownership or equity interest in the company if the loan is not paid back in time and in full.
The seminar, held by the CEO Club, attracted leading professionals in the financial field, and hundreds of CEO Club members.