Vietnam Holding holds continuation votes every five years and the next is due this December. Dynam Capital has been managing the fund since June 2018. Over that period (up to end September 2023), the NAV is up 43%, outperforming the Vietnam Index by 30% and the Vietnam All Share Index by 20%. Over the past five years the company has returned over $150m to shareholders through a combination of tender offers and share buybacks. Today, the fund is trading on a 10.2% discount, which compares to 17.4% for VinaCapital Vietnam Opportunity Fund and 18.0% for Vietnam Enterprise.
Subject to shareholder approval at an EGM convened for 21 December 2023 and to the passing of the continuation resolution at the AGM, the company will introduce an annual redemption facility. The first redemption point will be 30 September 2024.
You’ll have to have held shares continuously for at least six months ahead of the redemption point to be elegible to participate. The exit price will be determined by realising assets in a redemption pool. The redemption pool will bear the costs of providing the redemption facility. Discounts will apply –
- for shares acquired between 12 months and six months before the redemption point – 3%;
- for shares acquired between two years and one year before the redemption point – 2%; and
- for shares acquired more than two years before the redemption point – zero.
Anyone who wants to buy shares around the time of the redemption point will be able to buy shares that are subject to redemption requests.
If the company has received sufficiently large redemption requests that the directors consider it in the interests of shareholders to propose an alternative future, rather than allowing it to continue at a size that is uneconomic to run, then in addition to implementing the redemption, within three months of the redemption point the directors will put forward a resolution either to wind up the company or to implement a reconstruction, amalgamation or other material alteration as the board thinks fit.
[QD comment: Vietnam Holding is already smaller than it would like to be. The hope would be that introducing a redmption facility encourages the shares to trade closer to asset value and allows it to grow in due course. The problem, as we have pointed out repeatedly, is that an unlimited exit opportunity can mean the disappearance of an otherwise viable fund, just because the redemption opportunity coincides with some moment of market turmoil.]
VNH : Vietnam Holding introducing annual redemption facility