Investment Banking

Phd. Luu Thu Quang

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 REFERENCES

1. Alan D. Morrison and William J. Wilhem, JR, (2007), Investment Banking: Institutions,
Politics, and Law, Oxford University Press Inc.
2. David P.Stowell (2013), Investment banks, Hedge funds and Private equity, 2nd ed.
Elsevier.
3. Giuliano Iannotta (2010), Investment Banking: A Guide to Underwriting and Advisory
Services, Springer – Verlag.
4. Jerilyn J.Castillo and Peter J. McAniff (2007), The Practitioner’s Guide to Investment
Banking Mergers & Acquisitions Coporate Finance, Scoopbooks.
5. Joshua Rosenbaum, Joshua Pearl (2013), Investment banking: Valuation, Leveraged
Buyouts and Mergers & Acquisitions, 2nd ed, John Wiley & Son, Inc.
6. Mạc Quang Huy (2009), Cẩm nang ngân hàng đầu tư, Nxb Thống Kê.
7. Michel Fleuriet (2008), Investment banking explained: An insider’s guide to the
industry. Mc Graw Hill.
8. Tom Lott, Derek Loosvelt and the staff of Vault (2005), Vault Career Guide to
Investment Banking.
9. Viney Sawhey (2007), Investment Banking Syllabus, Havard Business School.
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 COURSE OBJECTIVES

Chapter 1
Understanding the characteristics of an investment bank, thereby comparing the similarities
and differences between investment banks and commercial banks.
Understanding the main activities of an investment bank.
Understanding the operation of an investment bank.

Chapter 2
The process of supporting stock issuance.
Understanding issuing bond process.
Understand the role of underwriting and distinguish the types of underwriting.

Chapter 3
Get an overview of mergers and acquisitions.
Understand the process of mergers and acquisitions.
Analyzing problems in merger and acquisition.
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 COURSE OBJECTIVES

Chapter 4
The basic concept of property management
Know the asset management process.

Chapter 5
The dynamics of private equity investment.
Know the private equity investment process.
Distinguish between co-financing and project financing.
Understand the proprietary trading of investment banking
Have an overview of hedge funds

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 COURSE OBJECTIVES

Chapter 6
Understand the process of consulting stock listings and consulting on corporate
transformation.
Solving the problems of capital restructuring and corporate governance restructuring.

Chapter 7
Understand the research function and know how to overcome the conflict of interest between
the research profession and other functions in investment banks.
Classify between types of trading orders
Know trading order and determine matching prices on stock exchanges.

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 CHAPTER 1
OVERVIEW OF INVESTMENT BANKING

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 CHAPTER 1: OVERVIEW OF INVESTMENT
BANKING

Content

1. OVERVIEW OF INVESTMENT BANKING

2. FUNCTIONS OF INVESTMENT BANKING

3. STRUCTURE OF IB

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 CHAPTER 1: OVERVIEW OF INVESTMENT
BANKING

1. OVERVIEW OF IB

1.1 History of IB

1.2 Concept

1.3 Characteristics of IB

1.4 Role of IB

1.5 Functions of IB

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 OVERVIEW OF INVESTMENT BANKING

1.1 History of IB

McFadden Act Glass-Steagall Act Gramm-Leach-Bliley Act

1933 1999
- Commercial banks are
separate from investment
. Banks only operate - Commercial banks are
banking and insurance.
within a state. allowed to engage in
- Commercial banks under
-Authorized
the management of FED securities and insurance
underwriting securities
are not allowed to business.
and insurance
implement investment
banking.

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 OVERVIEW OF INVESTMENT BANKING

1.1 History of IB

 In the United States, before 1933, the US banking system was

governed by the McFadden Act (the McFadden Act of 1927).
Accordingly, the law allows the state government to authorize the
branches of federal banks to open in the state by limiting the number
of branches that are opened and permitted underwriting securities
through internal departments or subsidiaries.

 After the collapse of the US stock market on October 29, 1929 (the
dark Tuesday), the main cause of this crisis is said that banks and
securities companies abused people's trust. The Glass-Steagall Act
(GSA) was passed by the US government in 1933.

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 OVERVIEW OF INVESTMENT BANKING

1.1 History of IB
 According to GSA, commercial banking is separate from
IB (including issuing, underwriting, selling or distributing
stocks, bonds and other securities) and prohibiting
commercial banks under FED's management from
participating in functions of IB => In the US, IB was
formed in 1933. This law also set the foundation of the
Federal Deposit Insurance Company.
 Note, in many developed countries in Europe, especially
Germany and Switzerland, there is no separation between
commercial banks and IB => IB has formed for centuries.
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 OVERVIEW OF INVESTMENT BANKING

1.1 History of IB

GSA has forced large banks to choose between commercial

banks and IB. For example, J.P.Morgan & Co chose the path
to continue commercial banks. A number of senior staff have
left to set up Morgan Stanley & Co.

In 1999, the Gramm-Leach-Bliley law (GLBA) replaced the

Glass-Steagall of 1933. This law allows the integration of
activities of commercial banks, IB and insurance into one
entity. This law is one of the causes of the great crisis in
2007.
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 1.1 History of IB

 To solve the 2007 Great Depression, the Dodd-Frank law was

passed in 2010. The Dodd-Frank was considered to be the
most profound financial market reform implemented since the
Great Depression in 1930, because it covered and corrected
most of the key issues of the financial market in order to
increase transparency and accountability, ensuring market
principles (do not use taxpayer money to handle financial
institutions) and better protect consumers in general and
depositors in particular ... This law greatly limits the activities
of banks and increases their costs. In 2017, Donald Trump
ordered to suspend this law.

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IB

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1.1 History of IB

The impact of the 2007 crisis on Banks

Commercial banks IB

Citigroup Goldman Sachs Multifunctional bank

J.P.Morgan Morgan Stanley Multifunctional bank

Bank of America Merrill Lynch

Nomura
Watchovia Lehman Brothers
Barclays Capital
Wells Fargo Bears Stearns

Washington
Mutual
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 1.1 History of IB

IB

Lazard
Greenhill
Rothschild
State capital Nomura Private
capital

Goldman Sachs Citigroup Barclays

Morgan Stanley J.P.Morgan Deutsche Bank
Bank of America Credit Suisse
RBS HSBC
BNP Paribas

Multifunctional bank

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 OVERVIEW OF INVESTMENT BANKING

1.2 Concepts
Investment banking means the
underwriting of securities, that is arranging for
the issuance by corporations of stocks and bonds.
Source: Prof. Rober Shiller, 2008, Financial Market online
course,Yale University.

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 OVERVIEW OF INVESTMENT BANKING

1.2 Concepts
An investment bank is a financial institution that assists wealthy
individuals, corporations, and governments in raising capital by underwriting
and/or acting as the client’s agent in the issuance of securities. An investment
bank may also assist companies with mergers and acquisitions and may
provide support services in market making and trading of various securities.
Source: WallstreetPrep.com

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 OVERVIEW OF INVESTMENT BANKING

1.2 Concepts
An investment bank is an organization that helps clients raise
and invest capital and advises clients on strategic matters, including
mergers, acquisitions, financings, and restructuring transactions.
Source: Jerilyn J. Castillo and Peter J. McAniff, The Practitioner’s Guide to Investment
Banking Mergers & Acquisitions Corporate Finance, 2007, First Edition, Pg.3
 

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 OVERVIEW OF INVESTMENT BANKING

1.2 Concepts
Investment Bank is an organization that supports
customers raise capital through underwriting securities
(stocks, bonds) providing brokerage services for
trading, research, consulting and restructuring
businesses. Consulting on mergers, acquisitions and
asset management at the same time conducting
proprietary trading, private equity investment, venture
capital investment. 

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 1.3 Characteristics of IB

1.3.1. Model
IB

Capital
Capital Capital
surplus shortage
Investment risk

Capital Capital
Capital Commercial Capital
surplus Bank shortage
Investment Investment
risk risk

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 1.3 Characteristics of IB

1.3.2. Incomes
IB CB
Securities issuance underwriting.
Broker Payment.
Fee Trustee, property management. Service.
Advisory. Advisory.
Deal.
Difference between lending interest Difference between net
Interest rate
rates and deposit rates of wholesale deposit rates and net
difference
banking operation lending rates
Trading instruments on
Profit Prop trading and wholesale bank money market, foreign
exchange, securities …

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 1.3 Characteristics of IB

1.3.3. Raising capital and using capital

Total Liabilities
IB CB
Discount financial
Repo Stock instrument
Receive trading margin Deposits from
Liabilities
Bank loan customers
Issue Bond Issue Bond
Interbank loans
Equity Equity
Equity Funds Funds
Retained earnings Retained earnings

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 1.3 Characteristics of IB

1.3.3. Raising capital and using capital

Using capital
IB CB
Lending for discounting valuable
Get a Repo Securities
papers
Lending for margin trading
Lending Customers lending
Project funding
Bond investment
Co-financing loan
Interbank lending
Investment on monetary market
Investment mainly on the
Investment mainly on the capital
Investment capital market
market
Fixed assets
Fixed assets

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 1.3 Characteristics of IB

CB IB
Raising capital first, then deciding
Only mobilize capital according
how to use the raised capital
to actual investment needs.
effectively, limiting risks.

“Capital mobilization" decides "Use of capital“ decides

"Use of capital". “Capital mobilization”

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NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ
 1.3 Characteristics of IB

1.3.5. Financial leverage

Commercial banks often have low financial leverage because:
 The proportion of assets in the list of credit loans and investment assets with
long-term holding orientation is quite large.
 Use bank’s reputation to raise capital from the population. Therefore, the
financial leverage ratio of commercial banks is controlled through capital
adequacy ratios of BASEL agreement.

IB have high financial leverage because most assets are highly liquid so it is easy
to mortgage for loans.
Accepting high leverage ratios and controlling them is art management of IB.

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 1.3 Characteristics of IB

1.3.5. Financial leverage

Rothschild Bank Wells Fargo &

AG Zurich Company
1000 CHF 1 triệu usd
Liability 3,976,765 1,264,057
Equity 4,349,498 1,422,968
Liability/Equity 91.4% 88.8%

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 1.3 Characteristics of IB

1.3.6. Legal framework

 Depending on each country, the management
organization of IB is different.
 In the US, before the 2008 financial crisis, IB was under
the management of the SEC. After the crisis, IB is under
the management of the central bank.
 In Europe, the management organization is the Central
Bank.
 In Vietnam, management organization of IB is the SSC.

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 1.3 Characteristics of IB

1.3.7. Others
IB CB
Market Equity market Monetary market
Stability of profitability Low High

Operational risk level High Low

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NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ
 OVERVIEW OF INVESTMENT BANKING

1.4. Role of IB
 For Businesses
 Help businesses raise capital effectively
 Consulting, supporting businesses to restructure, increase
competitiveness
 For investors
 Providing research products and services
 Securities investment brokerage
 For economy
 Support the capital rotation process smoothly
 Contribute to promoting economic development
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NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ
 OVERVIEW OF INVESTMENT BANKING

1.5. Functions of IB

 Broker
 Dealer
 Market Maker
 Trustee
 Advisor
 Servicer

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 Broker

Broker of Broker of
seller buyer

Seller Ticker Buyer

Seller Buyer

Seller Cash Buyer

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 Dealer and market maker

Asking price = Bidding price + Difference

Seller Buyer

Seller IB Buyer

Seller Buyer

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 OVERVIEW OF INVESTMENT BANKING

2. Functions of IB

2.1 Functions of IB

2.2 Entities performing IB operation

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NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ
 OVERVIEW OF INVESTMENT BANKING

2.1 Functions of IB
 Support to raise capital
 Support M&A
 Asset management
 Wholesale bank
 Enterprise consultancy
 Research
 Brokerage
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NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ
 OVERVIEW OF INVESTMENT BANKING

2.1 Functions of IB
 Support to raise capital:
This service support enterprise to increase capital by issuing
bonds or equity. In addition, IB supports these entities to
access specific capital sources.
 Support M&A
This functions provides M&A, joint ventures, strategic
alliances consultancy, divestments and strategic advice
against hostile acquisitions.

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NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ
 OVERVIEW OF INVESTMENT BANKING

2.1 Functions of IB
 Asset management
The bank will charge fees and provides asset consulting and
asset management for customers. Customers include not only
institutional investors, but also is wealthy individual customers.
 Wholesale banking
It is a high-risk proprietary trading because IB joint in private
capital investment, real estate investment, financial margin
loans, and large credit agreements such as co-financing and
project financing.

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NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ
 OVERVIEW OF INVESTMENT BANKING

2.1 Functions of IB
 Enterprise consultancy
IB will advise enterprises on solutions to problems that
businesses are facing, such as consulting on changing the form of
enterprises, consulting on restructuring, listing on stock exchange
...
 Research
IB will research and analysis of macro and micro economy,
sector, enterprises, securities and investment strategy which
support customers make investment decisions.
 Brokerage

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NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ
 OVERVIEW OF INVESTMENT BANKING

2.2 Entities performing IB operation

 Investment Bank
 Universal Bank: multi-functions bank
 Securities company
 Mutual fund
 Securities investment firm
In Vietnam, under the current law, IBs are implementing 1-part
multi function include (ABC, Sacombank), securities
companies (SSI, HSC), fund management companies (VFM)
and securities investment firm (not yet available).

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NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ
 OVERVIEW OF INVESTMENT BANKING

3. Operation OF IB

3.1 Operating environment of IB

3.2 Organization of IB

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NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ
3.1 Operating environment of IB

Credit rate
IBs
agency
Law advisor Research
company company

Tax advisor IBs CBs

company

Audit Investigation
company The company provides company
depository services and
securities payment
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NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ
 3.2 Organization of IB

 Organizational model of IB
 Interaction between business divisions

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NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ
 Organizational model of IB

Independent
Independent Multifunctio
Multifunctio
investment
investment nal
nalbank
bank
bank
bank

Insuran
Insuran
Comprehensive
Comprehensive In-depth
In-depth ce
ce
IB
IB CB
CB
investment
investment investme
investme compan
compan
bank
bank nt
ntbank
bank yy

NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ 46

 3.2 Organizational model of IB

(Front Office)

(Middle Office)

(Back Office)

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 3.2 Organizational model of IB
The structure of Front office

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NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ
 3.2 Organizational model of IB
The structure of back office

Bộ phận hỗ trợ (Back office)

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 3.2 Organizational model of IB

 Interaction between business divisions

Conflict of interest
 Between research and sale: under pressure to provide
reports that benefit the customer.
 Between research and investment: being pressured to
provide reports that benefit prop trading
 Between IB and investment management : occurs when
mobilizing capital to establish a new investment fund.

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 3.2 Organizational model of IB

 Interaction between business divisions

Share information
 Includes: public information and confidential
information (internal information).
 Private side has access to confidential and critical
information of customers, including IB staff.
 Public Side includes research and investment staff.

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 3.2 Organizational model of IB
Interaction between business divisions
Management ensures the separation of functions

Private side Public site

Soft bulkhead
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 3.2 Organizational model of IB
Interaction between business divisions
Management ensures the separation of functions

Sale and
IB department
Control trading
room

Research

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NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ
 CHAPTER 2
CAPITAL RAISING

54
 CHAPTER 2: CAPITAL RASING

Contents

1. Support securities issuance

2. Other forms of supporting capital mobilization

NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ 55

 CHAPTER 2: CAPITAL RASING

1. Support securities issuance

1.1 Support for stock issuance

1.2 Support for bond issuance

1.3 Underwriting

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 1. Support securities issuance

1.1 Support for stock issuance

1.1.1 The issuing organizations

1.1.2 Issuing methodology

1.1.3 Issuing condition

1.1.4 Issuing process

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 1. Support stock issuance

1.1.1 The issuing organizations

•Joint stock company
•Other types of enterprises are equitized in accordance with the law
(limited liability companies, state owned companies).

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 1.1.2 Issuing methodology

Number of Initial Public offering (IPO)

issuance Seasonal equity offering

According to the Private offering

object
Public offering
Stock
issuance According to the
valuation Issued at a fixed price
method Issued by auction method

According to the Direct issuance

issue method
Indirect issuance

NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ 59

 1.1 Support for stock issuance

1.1.2 Stock issuance

1.1.2.1 Number of issuance
•IPO
The organization issues securities for the first time after the
issuing organization has met the prescribed standards.

SEO
Companies that have issued shares and are traded on the
secondary stock market, issue more shares

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 1.1 Support for stock issuance

1.1.2 Issuing methodology

1.1.2.2 According to the object
•Public offering
An issue in which transferable securities are widely sold to the
general public to a certain number of investors (of which a small
percentage must be set to sell to small investors) and the volume of
issues must reach a certain level.

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 Issuing methodology

1.1.2.2 According to the object

•Public offering
Public offering is offering of securities by one of the following methods:
a) Through the mass media, including the internet;
b) Offering securities to 100 investors and more, excluding professional
securities investors
c) Offering to an unspecified number of investors.
Article 6 of the Securities Law 2006

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 Issuing methodology

1.1.2.2 According to the object

•Private offering
The issuing company offers its securities within certain entities
with limited conditions.
the Securities Law 2006

Private offering means an offering of securities to less than 100

investors, excluding professional securities investors and without using
mass media or the Internet.

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 Issuing methodology

1.1.2.2 According to the object

•Private offering
Private equity offering means a direct sale of shares or rights to
purchase shares and does not use the media to one of the following
entities:
a) Professional securities investors;
b) Under 100 investors who are not professional securities investors.
Article 4, Decree 01/2010 / ND-CP

NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ 64

 Issuing methodology

1.1.2.3 According to the valuation method

•Issued at a fixed price
By this method, the issuer sells securities directly at a fixed
price to the investor or indirectly issues via the underwriter.

Issued by auction method

Is the method by which the issuing organization or
underwriting organization will set a minimum price, the buyer will
directly compete their order. Issuing organizations will distribute
securities to investors on the principle of price priority.

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 Issuing methodology

1.1.2.3 According to the issue method

•Direct issuance
The issuing organization directly issues securities to investors.
Indirect issuance
The issuing organization through underwriters and distribution
agents to sell securities to the public

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 1.1 Support for stock issuance

1.1.3 Conditions for issuing stocks

Issuing conditions

QUALITATIVE QUANTITATIVE
CONDITIONS CONDITIONS

NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ 68

 1.1 Support for stock issuance

1.1.3 Conditions for issuing stocks

Qualitative conditions
Manager and executive members must have managerial qualifications and
experience.
The organizational structure of the company must be reasonable
Financial statements, prospectuses must be highly reliable
There is a feasible plan to use the capital
Guaranteed to issue (if any)

NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ 69

 1.1 Support for stock issuance

1.1.3 Conditions for issuing stocks

Quantitative conditions
The company must reach a certain size
The company must operate effectively
The total value of the issue must reach a certain scale
 Number of buyers are big enough
Time commitment held by founding members

NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ 70

 Conditions for issuing stocks

1. Conditions for issuing stocks to the public include:

a) Enterprises with the contributed charter capital of VND 10 billion or
more at the time of registration for issuance are calculated according to the
value inscribed in the accounting books;
b) Business operations in the preceding year of issuing registration year
must be profitable, and there must be no accumulated losses up to the year
of issuance registration.
c) Having a plan for issuance and a plan to use the capital gained from the
issue approved by the General Meeting of Shareholders.
d) A public company that registers to issue securities to the public must
commit to putting securities into transactions on the organized market
within one year from the date of ending the issue which is agreed by the
General Meeting of Shareholders" (According to the 2010 securities law)

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 Conditions for issuing stocks

Conditions for issuing stocks to the Private:

 1. For non-public joint stock companies:

a) There is a decision of the General Meeting of

Shareholders approving the private offering plan and has the
plan to use capital from the offering;
b) Satisfying other conditions prescribed by specialized
laws in case the issuing organization is an enterprise which
is operating in the conditional business line.

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NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ
 Conditions for issuing stocks

Conditions for issuing stocks to the Private:

 If a limited liability company transfers to a joint stock
company:
a) There is a decision of the owner or the Board of members
approving a private share offering plan for conversion;
b) Satisfying other conditions prescribed by specialized laws in
case the issuing organization is an enterprise which is
operating in the conditional business line.

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NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ
 Homework

FIND OUT CONDITIONS FOR ISSUING STOCKS TO THE PUBLIC (IPO)

1.America
2.England
3.Hong Kong
4.Singapore
5.China
6.Thailand
7.Japan
8.Korea

75
 1.1 Support for stock issuance

Process of issuing stocks to the public

Prepare Submit an Informatio Offering Market

application application n and maker
for to the disclosure distribution
issuance regulator of stocks

NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ 76

 Process of issuing stocks to the public

1. A registration document for issuance of

stocks to the public comprises:
a) A written registration to issue stocks to the
Prepare public;
application b) Prospectus;
for issuance c) Charter of the issuing organization;
d) Decision of the General Meeting of
Shareholders approving the issuance plan and
the plan to use the capital gained from the
issuance of stocks to the public;
e) Underwrite commitment (if any).

NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ 77

 Process of issuing stocks to the public

 Who to file for?

 Number of records?
Prepare Submit
 Type of submitting
application document to
paperwork ?
for issuance the regulator
 When was the record fully
recognized (starting profile
review)?

 Processing time of
regulatory agencies?
NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ 78
 Viglacera JSC’s Issuing certificate to public

On August 23, 2018, the State Securities Commission (SSC) issued the Certificate of public
offering registration No. 45 / GCN-UBCK to Viglacera Hanoi JSC.
Shares of Hanoi Viglacera JSC offer to the public with the following content:
- Type of stock: Common stock
- Par value of shares: 10,000 VND
- Total number of shares: 2,800,000 shares
- Total value offered by par value: VND 28 billion.
- Issuing consulting organization: FPT Securities Joint Stock Company
Viglacera Hanoi JSC has a charter capital of VND 28 billion. Head office: Floor 15,
Viglacera Building No. 1, Thang Long Boulevard, Me Tri Ward, Nam Tu Liem District, Hanoi.
The certificate takes effect from the date of signing.

79
 Process of issuing stocks to the public

Issuance announcement
•By the mass media
•Within 7 working days after
Submit Information
the effective date of the
document to disclosure
offering certificate.
the regulator
•Publication of prospectus to
investors

NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ 80

 Process of issuing stocks to the public

Step 3: Information disclosure

Issuance announcement
 In developed countries, the announcement of the offer is
made when the registration document is valid. In Vietnam,
the announcement of the offering is prescribed as follows:
o Within seven days after the effective date of the public securities
offering certificate, the issuing organization must publish the
information of issuance in an e- paper or newspaper in three consecutive
issues.
o Transfer the prospectus (complete and summary) to all branches,
distribution agencies or public places for easy access by investors.

81
 Process of issuing stocks to the public

Stocks Distribution
+ Book Building
All shares are distributed
Information Offering and at a single price
disclosure distributing
+ Auction
stocks
Shares are distributed at
the each winning price of
bidders

NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ 82

 Book Building

• Advantages Disadvantages
• Easily attract professional and • Book building method make
institutional investors decrease of stock price compared to
• Increase the likelihood of a Auction method
successful sale • High issuance cost
• Ensure the long-term benefits, and • The acts of making illegal profits
long-term development goals of the by the underwriter
company • Limit participation of individual
• Provide a more accurate pricing investors
mechanism than Auction Method

83
 Process of issuing stocks to the public

Step 4: Stock offering and distribution

Stocks Distribution
 The distribution of shares shall be made only after the issuing
organization ensures that buyers access to the prospectus in
the document of registration which is published at the
locations stated in issuance announcement.
 Issuing organizations, underwriters or agencies must
distribute shares fairly and publicly and ensure that the time
limit for buying registration is at least twenty days; This time
limit must be stated in the announcement of issue.

84
 Process of issuing stocks to the public

Step 4: Stock offering and distribution

Stocks Distribution
 The consulting organization should specify the priority
method for distribution, may use one or some of the following
methods:
o Price priority: investors who register to buy at higher prices will be prioritized
to buy first.
o Priority on time: investors who register first will be given priority to buy first.
o Priority in volume: investors registering to buy in bulk will be prioritized to
buy first.
o Other priorities as agreement, should be clearly stated in the registration form.

85
 Process of issuing stocks to the public

Step 4: Stock offering and distribution

Violating the auction if:
•Using an invalid form, without price and / or volume on the auction
form;
•Violating regulations on price step;
•The bid quantity is larger than the quantity offered;
•Bid price lower than starting price;
•Refuse to buy winning shares;
•Vote none in the ballot box.

A violation of the auction will not receive a deposit (maximum of not

more than 10% of the value of the securities you want to buy at the
starting price).
86
 Stock issue auction

 Type of auction shares: common stock;

 Face value: 10,000 VND.
 Charter capital: VND 6,800 billion;
 Number of auctioned shares : 59,440,000 shares;
 Limited number of registered shares: minimum of 100 shares
and multiples of 100;
 Starting price 30,500 VND. Price step 100 VND
 A maximum of 2 price levels corresponding to the total
number of shares purchased in the auction ticket can be
recorded.
Determine the auction result knowing this is price priority
auction.
87
 Example

Investors Bid price Volume

A 67,800 3,000,000
B 62,000 100,000
C 250,000 290,000
D 71,250 150,000
E 69,700 10,000,000
F 70,600 19,510,000
G 71,500 9,500,000
H 67,800 7,000,000
K 72,100 4,800,000
L 71,600 10,700,000
Total 65,050,000

88
 Example

Investors Bid price Bidding volume Wining volume Remained

C 250,000 290,000 290,000 59,150,000
K 72,100 4,800,000 4,800,000 54,350,000
L 71,600 10,700,000 10,700,000 43,650,000
G 71,500 9,500,000 9,500,000 34,150,000
D 71,250 150,000 - 34,150,000
F 70,600 19,510,000 19,510,000 14,640,000
E 69,700 10,000,000 10,000,000 4,640,000
A 67,800 3,000,000 1,392,000 -
H 67,800 7,000,000 3,248,000 -
B 62,000 100,000 -
Total 65,050,000 59,440,000

89
 Example

Result
The total subscription volume 65.050.000
Total valid volume 64.900.000
Total successful offers volume 59.440.000
Highest price 250.000
Lowest price 67.800
Average price 71.550

90
 Process of issuing stocks to the public

End of issuance
Report the results of the issue to
the regulator. (within 10 days after
the end of the offer)
Offering and End of
distributing issuance Transfer of shares or stock
stocks ownership certification to
investors (within 30 days from the
end of the offer)
Implementing stock price
stabilization.

NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ 91

 Process of issuing stocks to the public

Step 5: market maker

Issuers and underwriters transfer securities. If the guarantee
contract stipulates that the underwriters that plays a role of
stabilizing the market, they must trade in order to stabilize
stock prices within the certain time under the prescribed
conditions.
In Vietnam, the issuing organization and underwriter must
transfer securities to the buyer within 30 days from the end of
the offering. Cash from the securities issuing must be
transferred to the bank account.

92
 Process of issuing stocks to the private

Step 1: Issuing organizations shall send registration document to

management agencies, including:
1) A private securities offering registration form;
2) Decision of the General Meeting of Shareholders approving the offering plan
and the plan to use the capital from the offering;
3) Decision of the Board of Directors approving the criteria and list of offered
objects in the case authorized by the General Meeting of Shareholders;
4) Documents providing information about the offering to investors (if any).
5) Documents proving the rate of the foreign investor's participation and
compliance with the investment regulations in case of offering to foreign
investors.
6) The written approval from competent state authority for enterprises that operate
in the conditional business lines (if any).

93
 Process of issuing stocks to the private

Step 2: management agencies receive and verifies document.

Step 3: Within 15 days from the date of receiving a completed and
valid registration documents, the management agencies must notify
the issuing organization and publish it on its website about the stock
offering
Step 4: Within 10 days after the completion of the offering, the
issuer must report the results of the private offering.
Step 5: Within 10 days from the date of the decision of the Board of
Directors under the authorization of the General Meeting of
Shareholders about changing the plan of using the capital from the
private share offering, the issuing organization must report to the
competent state officials.

94
 1.2 Bond issue support

a. Issuing subject
b. Issuing method
c. Issuing conditions
d. Issuing process

95
 Issuing subject

 Being the entity who lacks capital and mobilizes capital

on the stock market, including: Government and
enterprises.
2005 Enterprise Law
1. Private enterprise Not allow to issue any kind of
2. Partnerships securities

3. Co., Ltd Not allow to issue equity

Be entitled to issue securities to raise
4. Joint stock company
capital

96
 Issuing subject

Issuing subject Right

Convertible bonds
Joint stock company
None convertible bonds
None convertible bonds
State-owned enterprises are
Bonds are guaranteed by
transforming
government
Co., Ltd None convertible bonds

FDI None convertible bonds

Government Government bonds

Local government Local government bonds
97
 Issuing method

 Bond retail: is a issuance method in which issuing

organization directly sells bonds to each bond buyer (only
for the issuing organization is a Government or a credit
institution).
 Bond issuance underwriting: is a method in which issuing
organization sells bonds through underwriters.
 Bond issuing agent: is a method that issuing organization
trust to another organization to sell bonds to purchasers.
 Bond issue bidding: is the method in which issuing
organization sell bond to eligible organizations who win
and meet the requirements of issuing organization.
98
 Issuing conditions

 Conditions for issuing bonds to the public

 Conditions for issuing bonds to the private

99
 Conditions for issuing bonds to the
public
a) Enterprises that have charter capital of VND 10 billion or more at the time of
registration according to the value recorded in the accounting books;
b) Business operations of the consecutive year before offering registration year
must be profitable, and there must be no accumulated losses up to the year of
offering registration, no overdue debts more than one year;
c) Having a plan for issuance, a plan to use and repay debts from the offering,
approved by the Board of Directors or the Board of Members or the company's
owner;
d) There is a commitment to fulfill the issuing organization's obligations to
investors regarding conditions for issuance, payment, assurance of rights and
interests of investors and other conditions.

100
 Conditions for issuing bonds to the
private
 None convertible bond:
a. Enterprises have operating time of at least one (01) year from the date
of officially going into operation;
b. Results of production and business activities of the year preceding the
year of issuance must be profitable according to financial statements
audited by the State Audit Office or an independent auditing
organization licensed to operate legally in Vietnam. The audited
financial statement of the issuing enterprise must be the audited
statement expressing the full acceptance. In cases, an enterprise issues
bonds before April 1 every year and has no audited annual financial
statements of the consecutive year, there must be:
Audited financial statements of the year before the preceding year have
profit; or

101
 Conditions for issuing bonds to the
private
 None convertible bond (cont):
• The last quarter financial statements is audited and has profit results (if
any); or
• Financial statements of the year preceding which has profit results and
approved by the Board of Directors, Board of Members or the President of
the company in accordance with the company's charter of operation.
c. Meeting requirements on safe capital ratio and other restrictions, and
ensure on operational prudence for companies which operate in
conditional business lines prescribed in specialized laws;
d. Having a bond issuance plan approved by a competent agency.

102
 Conditions for issuing bonds to the
private
 For convertible bonds or bonds with warrants, the issuing
organization not only must meet the above-prescribed conditions,
but also meet the following conditions:

1. Issuing organization must belongs to subjects entitled to issue

convertible bonds or bonds with warrants (2005 Enterprise Law)
2. Ensuring the participation rate of foreign parties in Vietnamese
enterprises according to current law provisions;
3. The issuance of convertible bonds must be at least 6 months apart.

103
 Process of issuing bonds to the public

 Including 5 steps:
 Step 1: Prepare the documents
 Step 2: Submit application for permission to sell to regulatory
agencies
 Step 3: Make information disclosure
 Step 4: Offering and distribution of bonds
 Step 5: Stabilize bond prices after offering

104
 Process of issuing bonds to the public

 Documents offers bonds to the public include:

a) A registration form of bond public offering;
b) Prospectus;
c) Charter of the issuing organization;
d) Decision of the Board of Directors or the Board of Members or
the company's owner approving the issuance plan and
repayment plan
e) Commitment to fulfill the obligations of the issuing organization
to the investor on conditions of issuance, payment, assurance of
the lawful rights and interests of the investor and other
conditions;
f) Underwrite commitment (if any).
105
 Process of issuing bonds to the private

 Step 1: Build a bond issuance plan and submit it to the

competent authorities for approval.
 Step 2: Prepare a bond issue file
 Step 3: Conduct the issuance of bonds

106
 Process of issuing bonds to the private

 Step 1: Build a bond issuance plan and submit it to the

competent authorities for approval.
a. For convertible bonds and bonds with warrants: The General
Meeting of Shareholders approves the issuance of bonds.
b. For other types of bonds: The General Meeting of Shareholders
or the Board of Directors, or the Board of Members or the
President of the company approve the bond issuance plan based
on the organizational model of the enterprise and the provisions
of the Charter of the enterprise.

107
 Process of issuing bonds to the private

 Step 2: Prepare a bond issue file

a) Bond issuance plans; and approving issuance plans by
competent authorities;
b) Documents and legal documents proving that the enterprise is
eligible to issue bonds;
c) Ranking results of credit rating organizations for bond issuers
and types of bonds issued (if any);
d) Issuance guarantee contracts, payment guarantees, agency
contracts and other relevant documents (if any).

108
 Process of issuing bonds to the private

 Step 2: Prepare a bond issue file (cont)

e) Legal documents proving that projects using bond capital
sources have completed investment procedures and investment
decisions of competent authorities in case of issuing bonds to
implement investment projects of the enterprises.

109
 Process of issuing bonds to the private

 Step 3: The issuance can be done in one of the following 4

ways:
1. Bidding for bond issuance;
2. Guarantee for bond issuance;
3. Bond issuance agent;
4. To sell directly to investors (if the issuing institute is a credit
institute) or retail to investors (if the issuing institute is a
government).

110
 1.3 Underwriting

a. Concept
b. Forms of underwriting
c. Conditions for performing underwriting

111
 Concept

 Underwriting is a commitment of the underwriting agency

to issuing institute to carry out the procedures before
offering securities and:
1. Accepting to buy part or all securities of issuing institute to
resell; or
2. Buy the remaining securities that has not been fully
distributed yet; or
3. Support issuing institute in distributing securities to the
public.
4. Underwriting includes financial advisory and securities
distribution.
112
 Forms of underwriting

 Underwriting with firm commitment;

 Underwriting with backup plan;
 Underwriting with the maximum effort;

113
 Forms of underwriting

According to Decree 58/2012 / ND-CP, underwriting

includes:
1. A firm commitment is a form whereby the underwriting
institute buys all the securities of the issuing institute to
resell or buy the remaining undistributed securities;
2. Maximum effort is the form whereby the underwriting
institute assists the issuer in carrying out the procedures
before offering securities to the public and assisting the
issuer in distributing securities to the public. ;
3. Other forms on the basis of a contract between an issuing
institute and an underwriter.
114
 Conditions for performing
underwriting function
 A securities company provides firm commitment underwriting
service must meet the following conditions :
1. Licensed to perform function of issuance underwriting.
2. At the time of signing the issuance underwriting agreement, the total value
of all underwriting contracts under the form of firm commitment must
meet the following conditions:
3. Not more than one hundred percent (100%) of the equity is calculated
according to the latest quarterly financial statements;
4. Do not exceed fifteen (15) times difference between current assets and
current liabilities calculated according to the latest quarterly financial
statements.
5. Not being put into the special control for three (03) months before the time
of signing the underwriting contract.

115
 Conditions for performing underwriting
function
 Securities companies are not allowed to underwrite the issue in the form
of firm commitments or are the main underwriter in the following cases:
a. A securities company with its subsidiaries or related persons, holds 10% or
more of the issuing organization's charter capital, or has control the issuing
organization, or has the right to appoint director (General Director) of the
issuing organization;
b. At least 30% of the charter capital of a securities company and at least 30%
of the charter capital of the issuing organization are held by the same
individual or an organization;
c. Issuing organization with its subsidiaries or related persons owning 20% ​or
more of the securities company's charter capital, or having control the
securities company, or the right to amend Director (General Director) of
the securities company;

116
 Conditions for performing underwriting
function
d. Member of the Board of Directors, Director (General Director) and
related persons of a securities company who is also a member of the
Board of Directors, Director (General Director) of the issuing
organization;
e. Members of the Board of Directors, Director (General Director) and
related persons of the issuing organization are members of the Board
of Directors, Director (General Director) of the securities company;
f. Securities companies and issuing organizations have the same legal
representative.

Securities companies provides underwriting service must open

separate accounts at commercial banks in order to receive cash
from investors.
117
 2. Other forms of capital mobilization

 support enterprises in accessing low-interest loans.

118
 CHAPTER 3
M&A

119
NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ
 CHAPTER 3: M&A

Content

1. Overview of M&A

2. M&A process

3. Problems in M&A

NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ 120

 CHAPTER 3: M&A

1. Overview of M&A

1.1 Definition

1.2 The motive of the seller and the buyer

1.3 Forms of M&A

NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ 121

 CHAPTER 3: M&A

1.1 M&A
“A merger occurs when one corporation is combined with
and disappears into another corporation”
Source: Read S. F et al ,2007, p.3

NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ 122

 CHAPTER 3: M&A

1.1 M&A
“A corporation acquisition is the process by which the
stock or assets of a corporation come to be owned by a buyer.”
Source: Read S. F et. al ,2007, p.4

NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ 123

 CHAPTER 3: M&A

1.1 M&A
Merger of companies: One or several companies
(hereinafter called to as a merged company) may merge with
another company (hereinafter referred to as the merging
company) by transferring all assets, legal rights, obligations and
interests to the merging company, and at the same time terminate
the existence of the merged company.
According to Article 195 of the 2015 Enterprise Law

NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ 124

 CHAPTER 3: M&A

1.1 M&A
Companies consolidation: “Two or more companies of the same
type (called an consolidated company) can be consolidated into a new
company by transferring all assets, rights and legal benefit to the new
company, and at the same time end the existence of the consolidated
company. ”
According to Article 153 of the 2005 Enterprise Law

NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ 125

 CHAPTER 3: M&A

1.1 M&A
Acquiring a company
A company purchases all or a part of the assets of another company
in ordet to control or dominate the whole or a branch of the acquired
enterprise.
According to Article 17 of the 2004 Competition Law

NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ 126

 1. M&A

Ownership rate Rights Influence level

10% or more Nominate candidates for the Board of  

Directors, Supervisory Board, convene an
extraordinary General Meeting of
Shareholders
20% - less than 50%  Vetoing decisions of the General Meeting of Associated Company
Shareholders (owning 35% or more)
50% - less than 65%   Subsidiaries
65% - less than 75% Approving decisions of the General Meeting Subsidiaries
of Shareholders (except for some cases)
75% or more Approved all decisions of the General Subsidiaries
Meeting of Shareholders
Source: Enterprise Law 2005, accounting standards 7 and 25

NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ 127

 1.1 M&A

In summary, M&A is the term used to refer to activities related to

mergers and acquisitions of enterprises in which:

Merger of enterprises is a Acquiring an enterprise is a

combination of two or more case in which an enterprise acquires
enterprises on the basis of assets or shares of another enterprise
inheriting their rights, obligations, and takes control of a part or the
and legitimate interests to the whole of an acquired enterprise.
merging company. Enterprises
consolidation is a case of
enterprise merger.

NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ 128

 1.1 M&A

Charter capital: 8.865

Vốn điều lệ:Billions
4.815 tỷ
07/08/2012
Vốn điều lệ:4.050 tỷ
HBB merger with SHB

129
 1.1 M&A

Charter capital: 9.000 billions

12/09/2013
PVFC consolidated with WesternBank

130
M&A: STB & PNB

131
M&A Bank to 2017

132
 1.1 M&A

63,51%

Buy factory

133
 M&A, VIET NAM, 2016-2017

Link

134
 M&A nổi bật 2017

Link

135
 SEA acquiring Foody

Link

136
 M&A, VIET NAM, 2018

Ngày 12/7/2018 vừa qua, FPT đã chọn cách khá đặc biệt - hội nghị trực tuyến từ
hai nửa địa cầu Việt Nam và Mỹ, để công bố thương vụ mua 90% cổ phần của
Intellinet, công tư vấn công nghệ của Mỹ. Tổng giá trị thương vụ khoảng 50 triệu
USD, trong đó FPT sẽ tra ngay 30 triệu USD, phần còn lại sẽ được trả dựa trên
kết quả kinh doanh của Intellinet trong vòng 3 năm.

Sau sự kiện tuyên bố khởi công nhà máy ôtô Vinfast với tổng vốn đầu tư 1,5 tỷ
USD hồi đầu năm, Vingroup lại tiếp tục khẳng định tham vọng lớn trong ngành
công nghiệp ôtô Việt Nam với thương vụ nhận chuyển nhượng, tiếp quản toàn bộ
nhà máy GM tại Hà Nội.

Công ty Nhật Bản Sojitz vừa chính thức mua lại CTCP Giấy Sài Gòn (Saigon
Paper) với giá 10 tỷ Yên (91,2 triệu USD).

137
 M&A, VIET NAM, 2018

Vào cuối năm 2017, tỷ phú người Thái - ông Charoen Sirivadhanabhakdi, Chủ
tịch Tập đoàn ThaiBev đã gây chấn động thị trường khi thông qua đơn vị thành
viên Vietnam Beverage chi gần 110 ngàn tỷ đồng (4,8 tỷ USD) để sở hữu 53,39%
vốn điều lệ của Tổng CTCP Bia – Rượu – Nước giải khát Sài Gòn (Sabeco,
HOSE: SAB) – công ty bia hàng đầu Việt Nam.

The Nawaplastic Industries Co. Ltd (Saraburi) là thành viên của tập đoàn Thái
Siam Cement Group (SCG) tiếp tục gom trên thị trường, tính đến hiện nay đã
gom được 52,96% vốn BMP (nhựa Bình Minh).

Công ty Siam Cement thuộc Tập đoàn SCG đã ký hợp đồng với Tập đoàn Dầu
khí Quốc gia Việt Nam (PetroVietnam) mua nốt 29% vốn tại dự án hóa dầu Long
Sơn để sở hữu 100% vốn. Giá trị của thương vụ vào khoảng 2.052 tỷ đồng và dự
kiến hoàn thành vào tháng 6/2018.

138
 M&A Tiêu biểu

Làn sống M&A của Thái tại VN

Thương vụ Sendo và Tiki sát nhập (Tin đồn)

Massan và Vincommerce

Kinh đô bán hết lại cho Mondelez

139
 1. M&A

Discuss
By your practical knowledge, please determine in the following M&A
transactions, which merger and which acquisition transactions are:
1. HDBank and Vietnam-Societe Financial Company (SGVF)
2. HDBank and DaiABank
3. Massan Consumer and Vinacafe Bien Hoa
4. Mizuho Bank (Japan) and Vietcombank
5. Microsoft and Nokia

NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ 140

 1. M&A

1.2 The motive of the seller and the buyer

 The motive of buyer

Create the synergy value:

 Operating Synergy

 Financial Synergy

NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ 141

 1.2 The motive of the seller and the
buyer

 The motive of the buyer

Operating Synergy

 Increase sales, expand products and markets

 Economies of scale

 Promote the unique advantages of each company

NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ 142

 1.2 The motive of the seller and the
buyer

 The motive of the buyer

Financial Synergy

 Increase working capital

 Reduce the cost of capital

 Tax benefits (short-term benefits)

NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ 143

 1.2 The motive of the seller and the buyer

 Tax benefits (short-term benefits)

Unit: Million dong Unit: Million dong

Cty X Cty Y Firm XY

   

Taxable income 1000 -200 Taxable income 800

Tax (25%) 250 0 Tax (25%) 200
Net income 750 -200 Net income 600

NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ 144

 1.2 The motive of the seller and the buyer

 The motive of the seller

 Enterprises face competitive pressure on the market

 Enterprises are in trouble

 Enterprises seek strategic partners to develop

 Attractive offer from the buyer

 Other motives

NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ 145

 1. M&A

1.3 Types of M&A

 Based on territorial limits

 Domestic M&A
 Cross – Border M&A
 Based on the relationship between enterprises conducting M&A
 Horizontal M&A
 Vertical M&A
 Conglomerate M&A

NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ 146

 1. M&A

1.3 Types of M&A

 Based on territorial limits
 Domestic M&A
M & A transactions between enterprises within the territory of 1
country
 Cross – Border M&A
M & A transactions between enterprises in different countries

NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ 147

 1.3 M&A

 Based on the relationship between enterprises conducting M&A

 Horizontal M&A
M & A transactions between enterprises in the same business line

DN A DNB DNC DND

NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ 148

 1.3 M&A

 Based on the relationship between enterprises conducting M&A

 Horizontal M&A

51,08%

NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ 149

 1.3 M&A

 Based on the relationship between enterprises conducting M&A

 Vertical M&A
• Vertical forward M&A
M & A transaction between a enterprise and the other party is a customer
of that enterprises
• Vertical backward M&A
M & A transaction between a enterprise and the other party is a supplier of
that enterprises

NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ 150

 1.3 M&A

 Based on the relationship between enterprises conducting M&A

 Vertical M&A

Vertical forward M&A

Customer DNC

DNA

DNB
Supplier

Vertical backward M&A

NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ 151

 1.3 M&A

 Based on the relationship between enterprises conducting M&A

 Vertical M&A

39,26%

55,31%

Vertical backward M&A

NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ 152

 1.3 M&A

 Based on the relationship between enterprises conducting M&A

 Vertical M&A

Vertical forward M&A

NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ 153

1.3 M&A

 Based on the relationship between enterprises conducting M&A

 Conglomertion M&A
M & A transaction between businesses that are not in the same industry.

NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ 154

155
 CHAPTER 3: M&A

2. M&A PROCESS

2.1 M&A process

2.2 Participating Parties

NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ 156

 2. M&A

2.1 M&A process

Strategic planning  Search and refine the  Consolidating

target enterprises enterprises
Classify  Contact the target
expectations enterprise
 Review after
Prepare resources  Appraisal of target consolidation
businesses
Route planning  Valuing target
businesses
 Deal

NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ 157

 2. M&A

2.1 M&A process

What is the development strategy of the enterprise?
•Firm size
•Revenue
•Market share
•Position of enterprises in the industry
...
Strategic
How can enterprises implement the proposed
planning strategy?
Classify •Self building
expectations •Actions
•Implementing through M&A
Prepare resources
Route planning

NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ 158

 State 1: Before deal

Advantages and disadvantages in choosing development

strategy
Self building Implementing through M&A

ü Control the implementation process ü Fast execution speed

Advantages ü Focused development ü Synergy between the two companies
ü Cost control ü Additional strengths for each other
ü Eliminate competitors
ü Low market entry risk

ü The execution time is long ü High consolidation risk

Disadvanta ü Conservative thinking ü High consolidation costs
ges ü Uncertainty about the acceptability ü Unwanted assets and liabilities
of the market
ü The competition is increasing

159
 2. M&A

2.1 M&A process

Classify expectations:
What are the expectations of
businesses with the strategy?
Prepare resources:
Strategic planning
Financial resources
Classify
expectations Human resources
Prepare resources Route planning:
Route planning How long does it take?

NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ 160

 2. M&A

2.1 M&A process

 Search and refine the target enterprises
Target customer information base:
- Department of planning and investment
- Career Association
- Information provision organization: Lexis-Nexis
Search and refine the (provides information of 43 million businesses
target enterprises worldwide)
 Contact the target - Database of IB
enterprise …
 Appraisal of target
 Enterprises selection criteria
businesses
 Valuing target - Business industry
businesses - Customer
 Deal - Business area…
NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ 161
 Search and refine the target enterprises

C C B A
B A A B A
A B A A A B
A A B A C B C
B B B C B C B
B C C B B
B B B B
B B A B A
A B CA A A
CA
C
A B C C B
C
Strategy
Customer
Industry

A
A C B A A A
A B A
A
B AA A A

IB participation
Customer self-implementation
162
 Contact the target enterprise

C B A
A B A
A A B C
B B C B
B
B B B
A B CA A
A B C
C

Strategy
Customer
Industry

A A A
A
A A
A A A

163
 2. M&A

2.1 M&A process

 Contact the target enterprise
- Make an appointment with the executive
board.
- Presenting the plan
Search and refine the - Preliminary negotiations
target enterprises - Sign a commitment to information security
 Contact the target
enterprise - Preliminary evaluation
 Appraisal of target  Continue or not continue the transaction
businesses
 Valuing target businesses  Choose the most suitable enterprise
 Deal Note: In case of many partners contacting with
target enterprise  to bid.
NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ 164
 2. M&A

2.1 M&A process

 Due diligence
 Detailed Due diligence process
 Participants
 Content of detailed Due diligence
Search and refine the
target enterprises
 Detailed Due diligence report
 Contact the target
enterprise
 Appraisal of target
businesses (Due diligence)
 Valuing target businesses
 Deal

NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ 165

 2. M&A

2.1 M&A process

 Due diligence
- Participants
 IB staff
 Accountant
Search and refine the  Independent auditor
target enterprises
 Contact the target
 Legal staff
enterprise  HR staff
 Appraisal of target
 Appraiser
businesses (Due diligence)
 Valuing target businesses  …
 Deal

NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ 166

 2. M&A

2.1 M&A process

 Due diligence
Content
 Fundamental elements of enterprises
 Business financial situation
Search and refine the  Legal Issues
target enterprises
 Contact the target  Personnel
enterprise  Technology
 Appraisal of target
businesses (Due diligence)
 Product
 Valuing target businesses  Insurance…
 Deal

NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ 167

 2. M&A

2.1 M&A process

 Due diligence
Content
 Fundamental elements of enterprise
 enterprise profile
Search and refine the
target enterprises  History of formation and
 Contact the target
development
enterprise
 Appraisal of target  The involved parties
businesses (Due diligence)
 Valuing target businesses
 Deal

NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ 168

 2. M&A

2.1 M&A process

 Due diligence
Content
 Financial situation
 Results of the present and the past years
Search and refine the
target enterprises
 Income
 Contact the target  Business expenses
enterprise
 Appraisal of target  Financial report
businesses (Due diligence)  Accounting issues
 Valuing target businesses
 Deal  ...

NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ 169

 2. M&A

2.1 M&A process

 Due diligence
Content
 Legal Issues
 Decisions of the Board meeting
Search and refine the  Company property papers
target enterprises
 Contract with the customer
 Contact the target
enterprise  Contract with supplier
 Appraisal of target  The dispute is existing
businesses (Due diligence)
 ...
 Valuing target businesses
 Deal

NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ 170

 2. M&A

2.1 M&A process

 Due diligence
Content
 Human resources
 Organizational structure
Search and refine the
target enterprises
 Personnel takeover plan
 Contact the target  HR policies
enterprise
 Demographic
 Appraisal of target
businesses (Due diligence)  Quantity and qualification
 Valuing target businesses
 ….
 Deal

NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ 171

 2. M&A

2.1 M&A process

 Due diligence
Report
Content
 Introduce
Search and refine the  Basic information
target enterprises  Detail Description of Due diligence
 Contact the target  Factors influencing the final bid value
enterprise  Market and competitive implications
 Appraisal of target
 Contingency plan
businesses (Due diligence)
 Valuing target businesses  Conclude
 Deal

NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ 172

173
 2. M&A

2.1 M&A process

 Valuing target businesses
 Assets Valuation
Enterprise value is the entire intangible
and tangible assets of the enterprise
Search and refine the  Maket Ratio Valuation
target enterprises Compared to the value of other
 Contact the target businesses
enterprise
 Appraisal of target
• Discount Cash Flow Model (DCF)
businesses (Due diligence) Enterprise value is the value of cash
 Valuing target businesses flow that enterprise creates in the future.
 Deal

NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ 174

 2. M&A

2.1 M&A process

 Deal
 Deal prices
 Payment methods
 Payment terms
Search and refine the
target enterprises  Rights and responsibilities of the seller
 Contact the target  Rights and responsibilities of the buyer
enterprise
 Appraisal of target  Other hidden payments
businesses (Due diligence)
 Valuing target businesses
 ...
 Deal

NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ 176

 2. M&A

2.1 M&A process

 Consolidating enterprises
After deal  Consolidation of organizational structure
 Financial consolidation
 Consolidation of personnel
 Consolidating  Cultural consolidation
enterprises
 Review after
 Merge on products
consolidation  ...

NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ 177

 2. M&A

2.1 M&A process

 Review after consolidation
After deal Evaluating based on the value of synergies
VAB > VA + VB  Synergy = VAB – (VA +
 Consolidating
enterprises VB)
 Review after
consolidation VAB : firm value after M&A
VA: Value of firm A before M&A
VB: Value of firm B before M&A

NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ 178

 2. M&A

2.2 Participating Parties

2.2.1 Buy Side

2.2.2 Sell Side
2.2.3 Investment Bank
2.2.4 Strategic advisor
2.2.5 Legal advisor

NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ 179

 2. M&A

2.2 Participating Parties

2.2.1 Buy Side

2.2.2 Sell Side

NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ 180

 Participation process of buyers and sellers

Sell Side Buy Side

• Review strategies of the executive board • Review strategies of the executive board
• Decide SELL assets or a business • The decision to buy assets or a business
segment or whole enterprise segment or whole enterprises
• Make a plan to sell, prepare important • Searching assets or businesses or business
documents and financial plans. segment or whole enterprise.
• Prepare a demo with some detailed • Receiving information from the target
documentation to provide potential buyers company during the transaction
• Ask the prospective buyer for an • Review the seller's introduction
acceptable purchase price
• Prepare pricing, receive documents the
seller provides

181
 Participation process of buyers and sellers

Sell Side Buy Side

• Make a short list of potential buyers and • Prepare for detailed due diligence (security
announce their selection required)
• Prepare documents of detailed appraisal • Receive documents and conduct detailed
(electronic and paper) for potential buyers due diligence and offer final purchase price
• Invite potential buyers to visit the company • Visiting company and attending the
and the introduction of the executive board introduction session of the executive board
• Prepare a preliminary transaction contract • Review the preliminary transaction contract
for the buyer provided by the seller
• Ask the buyer to give the final price • Propose final purchase price to the seller
• Consider the prices the buyer offers • Complete the financial plan for the
transaction
• Select final buyer • If feasible, buyer will negotiate contract. If
not, start over

182
 2. M&A

2.2 Parties
2.2.3 Investment Bank
 Strategic advisor
 Search for target businesses
 Negotiation strategy
 Negotiate with a partner
 Due diligence
 Company pricing
 Consolidated consulting activities
 Financial merger consulting
 ...

NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ 183

 CHAPTER 3: M&A

Content

1. M&A

2. M&A process

3. Problems in M&A

NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ 184

 CHAPTER 3: M&A

3. Problems in M&A

3.1 Capital support for M&A transactions

3.2 Post M&A

3.3 Anti-takeover tactics

NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ 185

 3. Problems in M&A

3.1 Capital support for M&A transactions

3.1.1 Capital mobilization in cash

3.1.2 Mobilizing capital by stocks

3.1.3 Mobilizing capital by bonds

3.1.4 Mobilizing mixed capital

NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ 186

 3.1 Capital support for M&A transactions

3.1.1 Capital mobilization in cash

This is the IB support for buyers to mobilize capital entirely in
cash to pay for M&A transactions
Advantages
Can speed up the negotiation process
Limits
The buyer must mobilize a large amount of cash resources
The seller must fulfill tax obligations for the deal

NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ 187

 3.1 Capital support for M&A transactions

3.1.2 Mobilizing capital by stocks

IB supports the buyer to use the shares of the enterprise itself
(through additional issuance or swapping shares) or shares that the
enterprise owns to pay for M&A transactions
Advantages
Not using a large amount of cash
Limit the use of debt
Tax obligations have not yet been fulfilled
Limit
Dilute earnings of stocks in the future

NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ 188

 3.1 Capital support for M&A transactions

3.1.2 Mobilizing capital by stocks

For example: Northern Kinh Do Joint Stock Company (NKD) and Kido
Ice Cream Joint Stock Company merge into Kinh Do Joint Stock Company
(KDC) according to the merging ratio as follows:
NKD and KDC (1,1: 1)
Kido ice cream and KDC (1,1: 1)
Vinabico Confectionery Joint Stock Company merges into Kinh Do Joint
Stock Company (KDC), the swap ratio is 2.2: 1 (2.2 Vinabico shares are
exchanged for 1 share of KDC)

According to the resolution of KDC General Meeting of

Shareholders dated April 21, 2012

NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ 189

 3.1 Capital support for M&A transactions

3.1.2 Mobilizing capital by stocks

For example:
North Kinh Do Joint Stock Company (NKD) and Kido Ice Cream Joint
Stock Company merge into Kinh Do Joint Stock Company (KDC)
in the following ratio:
NKD and KDC (1,1: 1)
Kido ice cream and KDC (1,1: 1)
Currently, Kido’s charter capital is VND 69,000,000,000, par value of
VND 10,000, KDC owns 28.33% of Kido. The chartered capital of
NKD is 151,242,160,000, the current ownership ratio of KDC is 0%
Please determine the number of shares that KDC needs to issue to pay
for the above M&A transaction. After issuance, how will the charter
capital of KDC change?
NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ 190
Làm thế nào để xác định tỷ lệ hoán đổi ???
Bài giải phần này
Trường hợp đang sở hữu: không tính phần sở hữu
Trường hợp không sở hữu: tính bình thường
Vốn điều lệ mới ???

191
 3.1 Capital support for M&A transactions

3.1.3 Mobilizing capital by bonds

IB helps the buyer to issue bonds to pay for M&A transactions
Debt here can be mobilized in the form of regular bonds or
convertible bonds.
Advantages
Not using a large amount of cash
The seller may defer taxes until the bonds are due
There is no pressure to dilute earnings per share at the moment
Limit
Buyer Must pay interest on bonds periodically

NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ 192

 3.1 Capital support for M&A transactions

3.1.3 Mobilizing capital by bonds

For example:
In the deal of Massan buying Nui Phao from Dragon Capital. In order to
own 70% of Nui Phao, Masan Group did not pay cash but issued
promissory notes to the seller (including Dragon Capital and other
shareholders). Accordingly, the seller will receive cash only when
the bill is due in 2017, or the option to buy shares of Masan Group
after 3-5 years.

See more at
http://cafef.vn/doanh-nghiep/thuong-vu-nui-phao-gia-tri-chuyen-nhuon
g-uoc-khoang-130-trieu-usd-20100628122914649ca36.chn

193
 3.1 Capital support for M&A transactions

 Leveraged buyout strategy

- Occurs when the buyer completely uses debt to buy the target
company
 Purchasing companies will borrow a large amount of money to pay
for merger costs.

- Purchasing companies use it own asset and the target company to

secure this loan
 Buying without necessarily having a large amount of capital
- In a deal using LBO, the debt ratio is 70%, the equity is 30%,
however there are many cases that the debt ratio can reach 90% -
95% of the total market capitalization of the target company
 3.1 Capital support for M&A transactions

Quick LBO modeling

ABC capital is considering a leveraged buyout of OpCo.

OpCo has a poor operation results over the last few years, with revenue and EBITDA declining rapidly,
but ABC capital believe that it has found a management team that will stabilize the OpCo

OpCo currently has EBITDA of $250 Millions, and ABC believes that the new management team could
keep EBITDA flat for the next 5 years

ABC capital has obtained debt financing of $750 mm at 10% interest, and OpCo expects working capital
to be a source of fund at $6 mm per year.

OpCo requires capital expenditure of $35 mm per year, and it has a tax rate of 40%. Assume no
transaction fee, zero minimum cash required, and that PP&E on balance sheet remain constant for the
next 5 years.

Assume that excess cash is not used to repay debt and instead simply accumulates on the balance sheet

Calculate the purchase price required for ABC capital to obtain a 3.0x multiple of invested capital (MOIC)
if it plans to sell OpCo after 5 years at an EV/EBITDA multiple of 6.0x

195
 3.1 Capital support for M&A transactions

3.1.4 Mobilizing mixed capital

IB helps the buyer to raise capital by combining capital mobilization
from two different sources or more to pay the seller.
Example:
Raising capital in cash and stock
Raising capital in cash combined with debt
Raising capital by stocks combined with bonds

NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ 196

 3. Problems in M&A

3.2 Post M&A

 Human resource issues

 Issues of corporate culture

 (Q&A)

NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ 197

 3. Problems in M&A

3.3 Anti-takeover tactics

3.3.1 Defensive Strategies avert Hostile Takeovers

3.3.2 Other Strategies relates to Hostile Takeovers

NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ 198

 3. Problems in M&A

3.3 Anti-takeover tactics

3.3.1 Defensive Strategies avert Hostile Takeovers
The hostile takeovers is understood as the M&A without the support
from the management of the target enterprise.
This happens in the following cases:
–Management wants to find the best buyer
–Management assessed that the independent operation of the
enterprise is a better choice
–CEOs strive to protect their personal interests.

NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ 199

 3. Problems in M&A

3.3 Anti-takeover tactics

3.3.1 Defensive Strategies avert Hostile Takeovers

Poison Pill Defense
Establish an Employee Stock Ownership Plan (ESOP)
Greenmail Defense
Staggered Board of Directors

NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ 200

 3. Problems in M&A

3.3 Anti-takeover tactics

3.3.1 Defensive Strategies avert Hostile Takeovers

Crown Jewel
Jonestown Defense

NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ 201

 3. Problems in M&A

3.3 Anti-takeover tactics

3.3.2 Other Strategies relates to Hostile Takeovers
White Knight
Gray Knight
Black Knight
Lady Macbeth
Pac-man

NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ 202

 3.3 Anti-takeover tactics

3.3.2 Other Strategies relates to Hostile Takeovers

White Knight

A term referring to a third party with the support of the CEOs,

conducting a M&A offer at a higher price than the current
competitor.

NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ 203

 3.3 Anti-takeover tactics

3.3.2 Other Strategies relates to Hostile Takeovers

Gray Knight

A term referring to a third party with the support of the

enterprise management, conducting a M&A offer at a higher price
than the current competitor. However, the support of the BOD for
the gray knight is unclear.

NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ 204

 3.3 Anti-takeover tactics

3.3.2 Other Strategies relates to Hostile Takeovers

Black Knight

The black knight is a third party without the support of the

BOD, conducting a M&A, so this is actually another hostile
takeover.

NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ 205

 3.3 Anti-takeover tactics

3.3.2 Other Strategies relates to Hostile Takeovers

Lady Macbeth

Is a tactic that a third party disguises as white knight to seek the

support of the executive board to conduct M&A. However, this
knight is colluding with the buyer, deceiving the executive board of
the target company.

NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ 206

 3.3 Anti-takeover tactics

3.3.2 Other Strategies relates to Hostile Takeovers

Pac-man

The target enterprise performs a counterattack by acquiring the

shares of the potential buyer in order to reverse the acquisition.

NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ 207

 References

1. DePamphilis D. M (2008) Mergers, Acquisitions, & Other Restructuring Activities, 4th Edition,
Elsevier.
2. Read S.F and Lajoux A.R, Nesvold H.P, 2007, The Art of M&A A Merger Acquisition Buyout
Guide, 4rd, McGraw-Hill.
3. Mạc Quang Huy, 2009, Cẩm nang ngân hàng đầu tư, Nhà xuất bản thống kê.
4. Gole W.J and Hilger P.J, Due Diligence, 2009, John Wiley & Son
5. Nguyễn Minh Kiều, 2009, Tài chính doanh nghiệp hiện đại, tái bản lần 2, Nhà xuất bản lao động
xã hội
6. Luật doanh nghiệp số 60/2005/QH11 ban hành ngày 29/11/2005
7. Luật cạnh tranh số 27/2004/QH11 ban hàng ngày 03/12/2004
8. Chuẩn mực kế toán số 7 và 25, Bộ tài chính, Ban hành và công bố theo Quyết định số
234/2003/QĐ-BTC ngày 30 tháng 12 năm 2003.
9. Công ty cổ phần Hùng Vương, Báo cáo thường niên năm 2011, 2012.
10. Công ty cổ phần Masan, Báo cáo thường niên năm 2011, 2012.
11. Ngân hàng TMCP SHB, 2012, SHB chính thức nhận sáp nhập HBB, truy cập
tại<http://www.shb.com.vn/TabId/503/ArticleId/1923/PreTabId/479/Default.aspx> truy cập
ngày 13/04/2014
208
 CHAPTER 4
Asset management

NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ 209

 Asset management

Content

4.1 GENERAL INTRODUCTION

4.2 FUND MANAGEMENT

4.3 PORTFOLIO MANAGEMENT

4.4 WEALTH MANAGEMENT

210
NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ
 CHAPTER 4: Asset management

4.1. GENERAL INTRODUCTION

4.1.1 Asset management concept

4.1.2 Types of asset management

4.1.3 Advantages of asset management

211
NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ
 4.1. GENERAL INTRODUCTION

4.1.1 Asset management concept

Asset management is a function in which consultants

help their clients (individuals or organizations) to carry
out asset management planning in order to exploit assets
effectively and create profit.
Asset here includes real assets or financial assets.

212
NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ
 4.1. GENERAL INTRODUCTION

4.1.1 Asset management concept

Within this course scope.

Asset management (investment management) is an
function in which IBs advises their customers (individuals or
organizations) to conduct investment plans into assets, mainly
financial assets, with expectations could earn return on these
investments.

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 4.1. GENERAL INTRODUCTION

4.1.2 Types of asset management

 Fund management
 Portfolio management
 Wealth management

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 4.1. GENERAL INTRODUCTION

4.1.2 Types of asset management

Fund management
Investment fund is formed from contributed capital of
investors with the purpose of making a profit from investing in
securities or other forms of investment assets, including real
estate, in which the investor does not have control over daily
monitoring of investment fund.

 Investment fund management means the IB operating

the activities of the fund to ensure achieving the initial goal.

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 4.1. GENERAL INTRODUCTION

4.1.2 Types of asset management

 Fund
An investment fund is a non-bank intermediary financial
institution that draws idle money from various sources to invest
in stocks, bonds, currencies, or other assets.
Source: VFM
Example:
• Vietnam Securities Investment Fund (VF1)
• Vietnam Growth Investment Fund (VF2)
• Vietnam Leading Enterprise Investment Fund (VF4)
• Vietnam Dynamic Investment Fund (VFA)
• Vietnam Bond Fund (VFMVFB)

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 The organizational structure of an
investment fund

Fund
State
management Ope
r management
company Fou ation
nda agencies
tion
Fund

se po rvis
cu sit or
de pe

rit ory y
Su
án

ie ,
t o

s
iểm Fund
K
Audit Representative
Supervisory
company Board
bank

Investors
217

NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ

 4.1. GENERAL INTRODUCTION

4.1.2 Types of asset management

 Portfolio management
Investment portfolio is a collection of investments
made by an individual or an organization through
the holding of one or more types of securities
(stocks, bonds, etc.) goods, real estate or other asset.

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 4.1. GENERAL INTRODUCTION

4.1.2 Types of asset management

Portfolio management
Portfolio management means the fund
management company is trusted by each investor in
the purchase, sale and holding of securities.
Securities Law 2006

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 4.1. GENERAL INTRODUCTION

4.1.2 Types of asset management

Portfolio management
Portfolio management is function that IB
manages professionally the portfolio of customers
(individuals or organizations) in order to achieve
specific investment objectives (profit, risk, time, ...)

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 4.1. GENERAL INTRODUCTION

4.1.2 Types of asset management

 Portfolio management
Asset management is a service that VFM will manage a
mixed portfolio including stocks and bonds. The rate of asset
allocation to asset in the portfolio will depend on the level of
risk tolerance and the investment objectives of the customer.
The portfolio created from this service meets a variety of
customers' needs (maximizing profits; stable or long-term
income).
(Source:– VFM)

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 Portfolios of VFM

maximizing Price growth

Portfolio Price growth Safety and profit Maximum safety
profits and profitability

Maximize profits Aiming at Towards a The main Capital

through maximizing profit balanced income income comes adequacy is the
increasing the through increasing between yields from the top priority
the price of the
Investment price of stocks in holding stock, and and dividends coupons of besides earning
objectives the portfolio at the same time and profit from investments profits higher
aiming to dividend the increase of along with the than bank
and Coupon bond. securities prices goal of deposits
preserving
capital

Maximum risk
tolerance (% of
entrusted 30% 20% 15% 5% 0%
capital)
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 4.1. GENERAL INTRODUCTION

4.1.2 Types of asset management

 Wealth management
Wealth management is the IB’s wealth
management under the trust of high-income
individuals, including consulting on personal
financial plan and investment plan.
Wealth management is a combination of portfolio
management and investment advice, this
service aims the upper class of society

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 4.1. GENERAL INTRODUCTION

4.1.2 Types of asset management

 Wealth management
 Other names of wealth management:
 Private Banking
 High Net World Banking

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225
 4.1. GENERAL INTRODUCTION

4.1.3 Advantages of wealth management

 For IB
 Enhancing competitiveness
 Generate stable sales
 Support for other businesses
 For customers
 Minimize risk by diversifying your portfolio
 Cost savings but still meet the profit requirements
 Professionally managed
 Supervised by the authorities

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 CHAPTER 4: ASSET MANAGEMENT

4.2. Fund management

4.2.1 Raising capital for the fund

4.2.2 Capital investments

4.2.3 Other problems

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 4.2. Fund management

4.2.1 Raising capital for the fund

 Method of raising capital

Mobilizing capital from investors through issuing fund
certificates
 Raising capital through assets contribution (stocks,
bonds ... to fund)
 Mobilized objects
• Individual investors
• Institutional investors

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 4.2. Fund management

4.2.2 Capital investments

 Step
 Analysis
 Making investment decisions
 Portfolio supervision
 Liquidating investments

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 4.2. Fund management

4.2.2 Capital investments

 Step
 Analysis
+ Macroeconomics
+ Sector, industry
+ Company

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 4.2. Fund management

4.2.2 Capital investments

 Step
 Macroeconomics analysis
• Macro trends: Domestic economy, import and export,
investment, and consumption markets (State and private)
• Financial system: current account, balance of payments,
exchange rate,
• Interest rates, inflation, taxes, monetary policy, fiscal policy
• Legal environment, applicable policies
• Relations with regional and world economy.

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 4.2. Fund management

4.2.2 Capital investments

 Step
 Industry analysis
 Industry life cycle: generation, growth, industry reorganization,
saturation and recession.
 PEST model (political, economic, social cultural, technological) social
factors, population, technology, State policies
 Michael Porter Model
 SWOT model

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 4.2. Fund management

4.2.2 Capital investments

 Step
 Company analysis
• Qualitative analysis
• Quantitative analysis
 Choose the pricing model that is suitable for each
company

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 4.2. Fund management

4.2.2 Capital investments

 Making investment decisions
Scope of decision
 The decision belongs to the executive board
 The decision belongs to the investment council
Asset allocation of fund
 According to the financial instrument
 According to the investment field
Investment limit

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 4.2. Fund management

4.2.2 Capital investments

 Portfolio supervision
- Research periodic reports of investments
- Periodic discussions with the CEO and BOD of invested
companies
- Appoint representatives to join the board of directors (for
large value investments)
- When there is a change, it may affect the value of the
fund's portfolio.  Conduct restructuring of the fund's
portfolio.
 Liquidating portfolio
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 4.2. Fund management

4.2.3 Other problems

- Operating expenses of the fund
- NAV of the fund
- Report
- Fund dissolution

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 Chapter 4: ASSET MANAGEMENT

4.3. Portfolio management

4.3.1 Portfolio management process

4.3.2 Portfolio building process

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 4.3. Portfolio management

4.3.1 Portfolio management process

Fund
management
company Receive Performance Liquidation
management
Sign of of
management management
requests contract contract contract

Customers
(Individuals, Institutes)

NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ

 4.3. Portfolio management

4.3.1 Portfolio management process

• Step 1: The Fund management company contacts and understands the needs
of the customer (receives management requests).

• Step 2: The Fund management company and customer sign management

contracts.

• Step 3: The Fund management company performs management contract.

• Step 4: The Fund management company and customer discuss and decide
whether to continue to extend or liquidate the contract.

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 4.3. Portfolio management

4.3.1 Portfolio management process

• Step 1: The fund management
The Fund company contact and explore the
management
company demands of the customer
Receive
management
requests
(received management requests).
Customers
(Individuals, o Find out KH needs
Institutes)
o Prove to customers the ability
as well as professional
qualification

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 4.3. Portfolio management

4.3.1 Portfolio management process

Step 2: The fund management
company and customer sign the
management contract

Receive
Sign Content of management contract:
manageme
nt requests contract + Amount and term of trust
+ Investment purpose, limited
rights and limited liability of the
company.
+ Management fee received by
fund management company.
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 4.3. Portfolio management

4.3.1 Portfolio management process

• Step 3: The Fund management
company implements contract
management.
- To build portfolio for customers
Performance
Sign
contract
of
management - Compliance with the agreement in
contract
the management contract.
- In case of arising out of contract,
it is required to customers’
approval.
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 4.3. Portfolio management

4.3.1 Portfolio management process

 Step 4: The fund management
and customer discuss and decide
whether to extend or liquidate
Performance Liquidation the contract.
of of
management management
contract contract • Renew the management contract
• Liquidation of the contract: on
schedule or before maturity

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 4.3. Portfolio management

4.3.2 Portfolio building process

Step 1

Step 2

Step 3

Step 4

Step 5

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 Investment Objectives
• SMART principle: Construction of Portfolio is
considered perfectly when it satisfies 5 conditions:
Specific and Measurable :
Motivational:
Achievable :
Realistic :
Time bound :

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 Investment Objectives
 Investment objectives usually refer to 3 factors:
 Target profit:
• Capital growth targets
• Regular income goals
• Capital preservation goals
Risk tolerance:
• Risk lover
• Risk-averse person
• Neutral investor
Term of capital recovery: The time an investor is
willing to accept to achieve a target profit.
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 4.3. Portfolio management

4.3.2 Portfolio building process

• Asset Allocation: determining the asset allocation

proportion of institutional or individual investors in order
to achieve the investment objectives:
– Cash and cash equivalents
– Instruments on money market
– Bonds Asset allocation
determines more
– Equity than 50% of the
– Real estate ... success or failure of
Portfolio

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 4.3. Portfolio management

4.3.2 Portfolio building process

• Investment Strategy:
– (Active Strategy)
– (Passive Strategy)
– (Mix-Strategy) : combination between the two above
strategies

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 4.3. Portfolio management

4.3.2 Portfolio building process

• (Active Strategy):
–Always focus on economic indicators, finance, and
different tools to make market forecasts and stock prices.
–Buying and selling securities actively to seek higher
profits than buying and holding securities.

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 4.3. Portfolio management

4.3.2 Portfolio building process

 (Passive Strategy)
– Understand the simplest way: Buy and Hold. Investors will
buy and hold stocks for a long time, almost no adjustment
or a minimum adjustment.
– The strategy is encouraged by effective market theory: the
market price of a stock is always reasonable, it quickly
reflects all the information related to that stock, the market
is a effective pricing mechanism and without mispricing
exist.

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 4.3. Portfolio management

4.3.2 Portfolio building process

• Security Selection:
The stage where investors have to use many different
methods to select specific securities for investment.
As a continuous work, investors not only choose the
securities one-time but also have to regularly adjust the
portfolio when the market has fluctuations or make timely
trading decisions when there are undervalued securities.

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 4.3. Portfolio management

4.3.2 Portfolio building process

• Security Selection:

– Stock selection methods:

• Fundamental Analysis

• Technical Analysis

– Bond selection methods

– Other asset selection methods

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 4.3. Portfolio management

4.3.2 Portfolio building process

•Performance Measurement:
–The achieved rate compares to the investment goal.
–The profit rate corresponds to each level of risk.
–Maximum diversification capability to eliminate non-
systematic risks.
–Factors used to evaluate the efficiency of the
portfolio: Actual profitability ratio of the portfolio, Risk
measurement coefficients, Average market return, risk-
free rate, etc.

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 4.3. Portfolio management

4.3.2 Portfolio building process

• Performance Measurement:
- Sharpe method
- Treynor method
- Jensen method

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 Chapter 4: Asset management

4.4.1 Wealth management

4.4.1 Types of wealth management

4.4.2 Process of wealth management

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 4.4. Wealth management

4.4.1 Types of wealth management

 Personal Finance planning and investment

consulting
 Trust portfolio management
 Combining consultancy and trust

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 4.4. Wealth management

4.4.1 Types of wealth management

Personal finance planning and investment consulting
IB provides service of personal financial planning
and investment advice to customers on the basis of
understanding individual financial needs as well as
investment objectives of customers. How to allocate
assets and invest strategies to achieve set goals

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 4.4. Wealth management

4.4.1 Types of wealth management

Personal finance planning and investment consulting

Characteristics
•IB provides personal financial planning and investment advice to customers
•Customer will decide each investment transaction as well as his entire portfolio.
•The role of IB only stops in providing advice and on behalf of Customer to
implement transaction based on Customer's decision.
•IB receives commission fee for each transaction of customer.
•Apply for customers with knowledge and investment experience.

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 4.4. Wealth management

4.4.1 Types of wealth management

Entrusting portfolio management

Customers entrust a part of their investment portfolio or
their assets to IB according to agreed criteria..

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 4.4. Wealth management

4.4.1 Types of wealth management

Entrusting portfolio management

Characteristics
•IB is more active in allocating asset structure and conducting
transactions within a certain limit.
•IB usually takes management fee on the total value of the
portfolio instead of commission for each specific service.
•Suitable for investors who do not have much knowledge,
investment experience as well as time involved in the daily
asset management.
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 4.4. Wealth management

4.4.1 Types of wealth management

Combining consultancy and trust

IB provides investment advisory services to
clients and is entrusted to manage a part of customers‘
assets in accordance with agreed criteria.

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 4.4. Wealth management

4.4.1 Types of wealth management

Combining consultancy and trust
Characteristics
•Consulting and trust limits are dependent on the requirements of the
Customer.
•Fees are calculated based on the complexity of the consulting service
and the size of trust assets.
•An overall financial plan will be consulted to the Customer with a
certain percentage of the value of the Customer's assets being fully
entrusted.
•For the remaining assets, investors may make specific investment
decisions based on advice from IB.

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 CHAPTER 4: ASSET MANAGEMENT

4.4.1 Wealth management

4.4.1 Types of wealth management

4.4.2 Process of wealth management

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 Process of wealth management

Building customer profiles

Legal advisory Taxes advisory

Build a Financial Plan - Define

investment objectives

Debt securities Asset allocation policy equity security

Insurance Build strategy– and Mutual fund

portfolio

Forex Investment Real estate

disbursement

Portfolio management and

performance measurement
265
 4.4. Wealth management

4.4.2 Process of wealth management

Step 1: build a customer profile

Step 2: build a financial plan and identify investment
objectives
Step 3: Asset allocation policies
Step 4: Choose strategy and make investment
Step 5: Manage the portfolio and evaluate the results

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 4.4. Wealth management

4.4.2 Process of wealth management

Step 1: build a customer profile

-Meeting and discussing with customers to determine
needs such as the current financial situation, medium-
and long-term goals, sources of income, spending plans,
current portfolio, level of risk accepted ...
-Establishing a continuous information collection
channel with customers

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 4.4. Wealth management

4.4.2 Process of wealth management

Step 2: build a financial plan and determine investment

goals
-Target profit
+ Capital growth target
+ Regular income target
+ Capital preservation target

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 4.4. Wealth management

4.4.2 Process of wealth management

Step 2: build a financial plan and determine investment
goals
Determine investment targets
-Level of accepting risk
+ Risk lover
+ Risk averse person
+ Neutral
-Term of capital recovery

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 4.4. Wealth management

4.4.2 Process of wealth management

Step 3: : Asset allocation policy
-Purpose of asset allocation:
+ Portfolio is designed to maximize profits
+ In accordance with the level of customer risk tolerance
+ Cash flow is generated by the portfolio in accordance with
the customer's spending plan.
+ Follow the agreement in the management contract
Investment allocation instrument: stocks, bonds, real estate,
deposits ...

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Profit-risk correlation of some investment assets

Rate of return

Derivative
Common stock
Real estate

Preferred stock

Convertible
bond
Corporate
Instrument on bond
Monetary
T- market
Government
bond
Risk

272
 4.4. Wealth management

4.4.2 Process of wealth management

Step 4: Strategy selection and Investment implementation

Strategy selection :
+ Active strategy
+ Passive strategy
Investment implementation
+ Reference: investment course

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 4.4. Wealth management

4.4.2 Process of wealth management

Step 5: Manage portfolio and evaluate results
•Update investment results and report to customers.

•Discuss investment results with customers.

•Evaluate results based on the correlation between profit

and risk of portfolio.

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 CHAPTER 5
Merchant Banking

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 CHAPTER 5: Merchant Banking

 Merchant banking is understood as an investment

business of IB. Investment objects of merchant banks are
alternative investment products such as private equity
investment, real estate, project financing and co-
financing loans ...
 The holding period of merchant bank is often long-term.

276
 CHAPTER 5: Merchant Banking

Content

1. Private equity investment

2. Loan financing

3. Investment businesses

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 CHAPTER 5: Merchant Banking

1. Private equity investment

1.1 Concept

1.2 Motivation

1.3 Process

1.4 Types of PE

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5 công ty tư nhân lớn nhất thế giới, 2017: Link

279
 1. Private equity investment

1.1 Concept

Private Equity is understood as equity held by a

limited number of shareholders in an unlisted (non-public)
company instead of invested capital in a public company.

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 1. Private equity investment

1.1 Concept
Private equity is the provision of equity capital by
financial investors over the medium or long term to non-
quoted companies with high growth potential
Source: The European Private Equity & Venture Capital Association

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 1. Private equity investment

1.1 Concept
Private equity investment is a strategy of investing
capital in a privately-owned company with the potential
grow. The goal aims increase the company's value through
financial restructuring and operational restructuring.
IBs have one main purpose: finding companies with
high potential growth in order to provide additional
capital, capacity and strategies to strengthen enterprises
sustainably and increase public value.

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 1. Private equity investment

1.1 Concept
Private equity investment is also possible by buying
listed companies, taking them out of the stock market to
becoming private enterprises to limit market interest. After
the restructuring and development process, private equity
enterprises will be re-listed on the stock market to divest.

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 1. Private equity investment

I- banks engage in private equity investment as:

 Financial investors (merchant banking );
 Mobilizing capital for private equity funds,
underwriting consultants, providing technical
assistance;
 Management of private equity funds (asset
management function);
 IB is an important partner in this type of investment.

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 1. Private equity investment

1.2 Motivation of PE
Advantages of PE
Simplicity
Harmonize the rights of the board and shareholders
Taxes saving through dividend policy
Taxes saving through capital structure.

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 1. Private equity investment

1.2 Motivation of PE
On the aspect of enterprises, please present the advantages of
enterprise in mobilizing capital through PE.
Suggestion:
-Support for capital and governance.
-Advantages of PE compared to debt
-Advantages compared to the issuance of shares (requirement
condition of authorities, IPO costs, stock market situation)

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 Process of PE

Step 1
(Capital Rasing)

Step 2
(Deal Sourcing)

Step 3
Analysis and due diligence

Step 4 (Final Negotiation)

Step 5
(Monitoring Investment)

Step 6
(Exit)

287
 Process of PE

 Capital Rasing
 Deal Sourcing
 In-Depth Company Analysis and Due Diligence
 Final negotiation
 Monitoring the Investment
Increasing financial value
Increasing operational value
Exit

288
 Process of PE

Step 1
(Capital Rasing)

Step 2
(Deal Sourcing)

Step 3
Analysis and due diligence

Step 4 (Final Negotiation)

Step 5
(Monitoring Investment)

Step 6
(Exit)

289
 (Capital Rasing) Enterprises actively seek to fund PE
Step 1
PE Fund actively seeks enterprises.
Fund's standards and strategy
Step 2
(Deal Sourcing) -Identify industries and sectors that
are profitable potential
-Contact with the target company
Step 3
Analysis and due Information about Enterprises
diligence
-The process of foundation and
development
Step 4
(Final Negotiation) -Competence and ability of the
executive board.
-Form of ownership
(Monitoring Investment) -Products and services.
Step 5
-Business development strategy
-Capital needs of enterprises
Step 6
(Exit) -Exit opportunities
...
290
 (Capital Rasing) In depth Company analysis
Step 1
-Comprehensive analysis of all aspects
(information)
Step 2
(Deal Sourcing) PE fund will contact and meet with
BOD of the suitable enterprise
Due Diligence
Step 3
Analysis and due -Legal
diligence
-Product and technology
-Finance
(Final Negotiation)
Step 4 -Human resource and welfare
-Important contracts
(Monitoring Investment) -Taxes obligation
Step 5
-…

Step 6
(Exit)

291
 (Capital Rasing) - Draft contract
Step 1

- Disclosure letter
- Representation &
(Deal Sourcing)
Step 2 Warranties
- Indemnity
Analysis and due
- Share holder Agreement
Step 3
diligence + The right to appoint the
Board of Directors
(Final Negotiation) + Veto right
Step 4
+ Restricting share transfer
+ Regulation on corporate
Step 5
(Monitoring Investment) governance
+ Divestment provision
….
Step 6
(Exit)

292
 (Capital Rasing)
Step 1

Step 2
(Deal Sourcing)

Step 3
Analysis and due
diligence
- Appointing the BOD and
the executive board
(Final Negotiation)
Step 4 - Financial planning and
operational plan
(Monitoring Investment) - Join the orientation plan
Step 5
for enperprises
- Monitoring business
Step 6
(Exit) activities….

293
 (Capital Rasing)
Step 1

Step 2
(Deal Sourcing)
- IPO
- List share on Stock exchange
Step 3
Analysis and due
diligence - Trade Sale
- Sale to other financial investors
(Final Negotiation)
- Management team purchase
Step 4
- Liquidation

(Monitoring Investment)
Step 5

Step 6
(Exit)

294
 1. Private equity investment

1.4 Types of PE

1.4.1 Venture Capital

1.4.2 Leveraged Buyout – LBO

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 1. Private equity investment

1.4 Types of PE

1.4.1 Venture Capital

Concept

Venture capital investment model (operating

structure)
Process of venture capital investment

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 1.4 Types of PE

1.4.1 Venture Capital

Concept
Venture capital is a source of financing for new
businesses. Venture capital funds pool investors' cash and loan
it to startup firms and small businesses with perceived, long-
term growth potential.
Source: CFA Institue, Level 1

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 1.4 Types of PE

1.4.1 Venture Capital

Concept
Venture Capital - VC is an investment strategy
whereby venture capital investors provide capital to
entrepreneurs with excellent business ideas for them to
start a business or provide capital to businesses at an
early stage of development. VC expect to share risks
and find a large return on this investment.

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 1.4 Types of PE

 Venture capital investment model (operating structure)

Entrepreneurs capital Dividend

excellent business ideas Enterprise

Venture capital stock price

(Managing members + increase
Capital contributing
members)
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 Venture capital

Operating structure
• Venture capital is usually conducted by venture capital funds,
this fund usually has an operating period of 10 - 12 years.
• Because of the risk and complexity, a venture capital
transaction is usually conducted in the form of a Ltd company,
the fund management company and the capital contributors in
order to attach the rights and responsibilities of the fund
managers. Capital-contributing members do not participate in
the management activities and without responsibility for arising
problems.

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 1.4 Types of PE

Venture capital

Process of VC

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 Venture capital

Process of VC
Review and  Venture capitalists typically assess
appraise
investment investment opportunities through
projects four criteria:
 Management experience
 Market
 Product
 Finance

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 Casestudy: IDG Việt Nam

We select our portfolio companies according to well-established investment

criteria. A company must:
•Be led by a strong management team with the vision, experience and dedication
to build a successful company.
•Offer a uniquely beneficial product or service that targets a lucrative, clearly
defined market opportunity in the domestic or global market.
•Be able to leverage technological advantage into a defensible market position.
•Understand the demographics, behavior and preferences of its customers.
•Be responsive to changing market conditions.
•Be 100% supportive of international best practices and financial transparency.

Outline Biz plan for START UP

304
 Venture capital

Review and appraise investment projects

Management experience

 Management experience and competencies are the most

important factor for a venture capital transaction.
 An enterprise with an unattractive product but good
management will be more likely to be selected than an
enterprise with an attractive product but of poor quality.

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 Venture capital

Review and appraise investment projects

Market

 A venture investor often prioritizes development markets,

fast growth and potential for expansion.

 Often interested in industries such as information

technology, biotechnology, telecommunications, internet
and some other special fields.

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 Venture capital

Review and appraise investment projects

 Products
•Products need to achieve a necessary level of
sophistication, avoiding competitors can easily copy
production.
•Products must achieve a gross profit level above the
market average.
•The target enterprises should have a plan to develop
different product lines in order to create a continuous
succession instead of a monotonous product.

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 Venture capital

Review and appraise investment projects

Finance

•The Venture investor will evaluate the financial feasibility of

the investment opportunity.
•In order to meet the financial criteria, the venture investor will
set the maximum price paid for the purchase of equity, interest
rate on financing as well as the terms and conditions of
investment.

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 Make Venture capital
investment

Time line
divestment
Investment
Expansion accelerates
Seeding
investing
Start-up
investing
First stage
Profit area
investing

Loss area

Profit
Venture capital Invest more and provide capital

309
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 Venture capital

Process of Venture capital

Divestment
Divestm
Investments are recovered through four main
ent
channels:
• Initial public offering (IPO)
• Sell shares to other investors
• Resell shares to enterprises
• Sell enterprises to other enterprises.

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 IDG Venture Vietnam

 IDG Ventures Vietnam (IDGVV) is the first venture capital

technology fund in Vietnam. Since 2004, IDG has been
working with enterprises to develop innovative and market-
leading companies. IDGVV currently manages $ 100 million,
investing in more than 40 companies in technology, media,
telecommunications and consumer sectors.
 Seedcom
(source: http://idgvv.com.vn/en/about-us/idgvv )

311
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 Portfolio of IDG VENTURE VIETNAM

MEDIA AND INFORMATION AND TECH - ENABLED CONSUMER

ENTERTAINMENT COMMUNICATIONS BUSINESS INFRASTRUCTURE
TECHNOLOGY

 Moore Corp.  Apollo Vietnam  YeuTheThao  Vinapay

 YeuAmNhac Group  VC Corp.  WebTreTho  Socbay
 VSMC  Pyramid  Vietnamworks  MX
 Vinagame  Punch  Vinabook  DreamViet
 Vega Tech  MSS  VietStock  Dia Diem JSC.
 TV Plus  Mobivox  Vat Gia
 TinhVan Media  GES  San Pham Viet
 Tamtay JSC.  OTC Vietnam
 Rubicon  PeaceSoft
 DMS Group  Muaban JSC.
 Magnet  Minh Dat Viet
 Isphere Soft  Hocmai.vn
 Goldsun Focus  EPI
Media  Dia Oc Online
 FBNC
 Cyvee

312
 A&Q

The advantages of venture capital over other capitals

Suggestion:
Initial capital of the investor
The risk of the project makes it difficult to call for
investment
New enterprises are difficult to borrow capital from banks
(no assets or profits from business)
...

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 1. Private equity investment

1.4 Types of PE

1.4.2 Leveraged Buy Out - LBO

Concept

Capital structure for implementing LBO

Benefits and risks of LBO

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 1.4 Types of PE

1.4.2 Leveraged Buyout - LBO

Concept
 Leveraged Buyout –LBO is a strategy of buying
enterprises through using external loans to pay current
shareholders of the target enterprises.
 The level of external borrowing normally accounts for
70% of the capital to be mobilized. LBO is one of the
common tactics of private equity investment.

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 1.4 Types of PE

1.4.2 Leveraged Buyout - LBO

Concept

Liabilities BUY Value of

the target
enterprise
Equity

316
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 1.4 Types of PE

1.4.2 Leveraged Buyout – LBO

Concept (cont)
 When the LBO transaction is conducted through a
combination of the current management board of the
enterprise calls management buyout (MBO).
 This strategy can occur in 2 cases:
 Buyout Fund actively discovers target businesses
 The Board of Directors actively propose the Buyout Fund
together with them to acquire their own businesses.

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 1.4 Types of PE

1.4.2 Leveraged Buyout – LBO

Capital structure for implementing LBO
 Create a “shell company” which has capital structure as follow:
 Private equity investment fund stands out to provide equity;
 Other partners provide loans;
 This “shell company” proceeds to acquire target businesses

 Private equity investment funds only involved in equity in order to

disperse risks focusing on a business purchase. Moreover, this will
maximize profits because the ownership is undiluted.

318
NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ
 Capital structure for implementing LBO

Capital Shell company

financial
Loans
sponsor
Liabilities:
Interest Type A
Type B
Capital
Type C
Investors Securitized Mezzanine Target firm
own CLO Bonds debt
Interest High-Yield
bonds

Private Capital Private

equity Equity
equity fund
investors

319
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 1.4 Types of PE

1.4.2 Leveraged Buyout – LBO

Benefits and risks of LBO strategy
Benefit
• Maintaining high financial leverage helps save tax costs;
• Pressure to pay interest on debts forced managers to focus on better
management of businesses, especially cash flow quality management;
• The Board of Directors aligns their rights with the businesses, resolving
the issue of conflicts of interest between the executive board and the
shareholders;
• As a non-public company, the company can avoid the supervision
requirements of authorities;

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 1.4 Types of PE

1.4.2 Leveraged Buyout – LBO

Benefits and risks of LBO strategy
 Risk of LBO
• Using high leverage will make target enterprise
become very risky.
• The success of LBO largely depends on the efforts
of the BOD.

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 CHAPTER 5: Merchant banking

2. Loan

2.1 Loan syndication or co-financing

2.2 Project funding

322
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 CHAPTER 5: Merchant banking

2. Loan

2.1 Loan syndication or co-financing

2.2 Project funding

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 2. Loan

2.1 Loan syndication or co-financing

2.1.1 Concept
2.1.2 Perform
2.1.3 Advantages and disadvantages

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 Loan syndication or co-financing

Concept
 Co-financing The act or practice in which two different lenders
agree to finance a single project for a borrower. For example, two
lenders may agree to extend loans to start a business. The co-
financiers use the same information and documentation when
executing this arrangement, but the loans may have different
terms.
 Currently, co-financing loans is no longer the territory of
commercial banks but is participated actively by banks because of
the benefits from the large scale of transactions. However, the big
market share still belongs to commercial banks.

325
NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ
 Loan syndication or co-financing

Why do IBs conduct co-financing?

In accordance with the law on lending limits
Capability of capital source of IB
Scattering risks
Learning experiences of other banks

326
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 Loan syndication or co-financing

Co-financing model

Bank A Co-financing loan

Bank A: x%
Bank B Bank B: y% Customers
Bank C: z%
Bank C

327
NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ
 Loan syndication or co-financing

 Advantages
 Create conditions for IB to meet the needs of
customers
 Scatter risk, profitability and competition
 Improve reputation, position to help expand
customers
 Create conditions for small banks to learn
experiences
 Disadvantages
 Can lose customers if the management is not
good.

328
NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ
 2. Loan

2.2 Project funding

2.1.1 Concept
2.1.2 Perform
2.1.3 Advantages and disadvantages

329
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 Project funding

 Concept
 Characteristics

330
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 Project funding

Concept
 Project funding is financing a specific economic unit, in which
the lenders satisfy with the income of the economic unit as the
source of debt repayment, the lenders consider the entity's
assets as collateral of the loan.
 Project funding is also a credit activity of commercial banks

331
NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ
 Project funding

Characteristics

Project funding is not merely a project lending activity

Project funding uses the project's assets as collateral

 Look at the project's future assets as a source for debt

recovery

332
NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ
 CHAPTER 5: Merchant banking

3. INVESTMENT FUNCTIONS

3.1 Proprietary trading

3.2 Hedge Fund

3.3 Real estate investment

333
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 3. INVESTMENT FUNCTIONS

3.1 Proprietary trading

3.1.1 Concept
3.1.2 The purpose of proprietary trading
3.1.3 Requirement for proprietary trading
3.1.4 Process of proprietary trading

334
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 3.1 Proprietary trading

3.1.1 Concept
 Proprietary trading means a IB conducts transactions of buying
and selling securities for itself.
 Proprietary trading activities may be carried out on Stock
Exchange and OTC:
 On the Stock Exchange: trading orders of securities trading organizations
are put into the system and implemented in the same way as trading
orders of customers.
 On OTC: these activities can be done directly between an organization
and partners or through an information network.

335
NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ
 3.1 Proprietary trading

3.1.2 The purpose of proprietary trading

Findingprofits
Market Maker

336
NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ
 3.1 Proprietary trading

3.1.3 The requirement of proprietary trading

 Separate management
 Customer priority
 Stabilize the market
 Other requirements (investment limit, field of
investment ...)

337
NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ
 3.1 Proprietary trading

3.1.3 The requirement of proprietary trading

 Separate management: Securities trading organizations must
separate activities between proprietary trading and brokerage
operations to ensure transparency and clarity. In detail, both
human factors and professional processes must be separated.
 Customer priority: Customer's trading orders must be processed
before any proprietary trading orders of the organization. This
principle ensures fairness for customers in the process of
securities trading.
 Stabilize the market: Normally, this is not a mandatory
regulation, but usually a professional principle set by securities
associations and securities trading organizations must follow.
338
NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ
 3.1 Proprietary trading

3.1.4 Process of proprietary trading

 Phase 1: Develop an investment strategy
 Phase 2: Building a portfolio
 Phase 3: Analyzing and evaluating investment quality
 Phase 4: Making investment
 Phase 5: Investment supervision and capital recovery

339
NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ
 3. INVESTMENT FUNCTIONS

3.2 Hedge Fund

3.2.1 Concept
3.2.2 Liabilities
3.2.3 Operation risk
3.2.4 Operation process of the hedge fund

340
NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ
 3. INVESTMENT FUNCTIONS

3.2 Hedge Fund

3.2.1 Concept
A hedge fund is usually known as a membership fund which are generally
only accessible to accredited investors as they require less SEC regulations than
other funds. The hedge fund is highly risky and not for the public
Hedge funds are alternative investments using pooled funds that employ
different strategies to earn active return
Hedge funds may be aggressively managed or make use of derivatives and
leverage in both domestic and international markets with the goal of generating
high returns

341
NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ
 Concept

 Investors participating in the hedge fund are mainly institutional

investors and wealthy individuals who meet certain conditions of
assets and investment knowledge.

342
NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ
 Concept

 Compare hedge funds and private equity funds:

 Similarity: Are member funds, and less be strictly supervised
by authorities. Implementing a high-risk trading strategy to
bring high profits to investors.
 Difference: The hedge fund mainly invests in short-term
assets that are speculative and highly liquid. The strategy of
hedge funds is to make a profit by exploiting market arbitrage.
While the private equity fund adopts a long-term strategy of
investing in enterprises with the potential to create value
through operational restructuring. A private equity investment
transaction lasts 3- 7 years.

343
NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ
 3. INVESTMENT FUNCTIONS

3.2 Hedge Fund

3.2.2 Liabilities
The largest source of capital that pours into the hedge fund is
from wealthy investors.
The second source of capital is from other investment funds
(called fund of funds).
In addition, pension funds and life insurance companies also
become partners that provide important funding for hedge funds.

344
NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ
 Liabilities

Example: capital structure of a hedge fund

345
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https://vietstock.vn/2018/02/long-term-capital-management
-khi-thien-tai-that-bai-3355-583396.htm

346
347
 3. Investment functions

3.2 Hedge Fund

3.2.3 Operation risk

Use high financial leverage
Short sale
Risky Investment
Lack of transparency and oversight mechanism

348
NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ
 3. Investment functions

3.2 Hedge Fund

3.2.4 Operation process of hedge fund

Promote, Distribute, Sell

Capital mobilization Investment Payment

Additional service
Broker
Provide capital Investment analysis
Payment Handling questions
Securities borrowing Capital allocation Balance and requests
Short sale Investment strategy reconciliation

Risk Management, Accounting, Finance, Human Resources, Information

Technology

349
NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ
 Reference

The Little Book of Venture Capital Investing:

Empowering Economic Growth and Investment Portfolios (
Louis C. Gerken with Wesley A. Whittaker ISBN: 978-1-118-
55198-1)

350
 CHAPTER 6
ENTERPRISES CONSULTING SERVICE

351
 CHAPTER 6: ENTERPRISES
CONSULTING SERVICE

Content

1. Business & Finance Consulting

2. Business Restructuring Consulting

NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ 352

 CHAPTER 6: ENTERPRISES
CONSULTING SERVICE

1. Business & Finance Consulting

1.1 Enterprises consulting on listing securities

1.2 Consulting on changing form of enterprises

NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ 353

 1. Business & Finance Consulting

1.1 Enterprises consulting on listing securities

1.1.1 Listing concept
1.1.2 Listing conditions
1.1.2 Advantages and disadvantages of listing
1.1.3 Forms of listing
1.1.5 Listing process

NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ 354

 1. Business & Finance Consulting

1.1 Enterprises consulting on listing securities

1.1.1 Listing concept
A listed security is a financial instrument that is traded
through an exchange, such as the HOSE, NYSE or Nasdaq. When
a private company decides to go public and issue shares, it will
need to choose an exchange on which to be listed. To do so, it
must be able to meet that exchange's listing requirements and pay
both the exchange's entry and yearly listing fees

NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ 355

 1. Business & Finance Consulting

1.1 Enterprises consulting on listing securities

1.1.2 Condition for listing securities

There are 2 groups of listing conditions

Quantitative conditions
Qualitative conditions

NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ 356

 1.1 Enterprises consulting on listing securities

Quantitative conditions
 Firm size: charter capital, total assets, market value ...
 Operating time of the company.
 Profitability (ROA, ROE).
 Revenue
 Stock distribution (percentage of ownership)
 Stock holding time of founding shareholders and executive
board

NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ 357

 1.1 Enterprises consulting on listing securities

Qualitative conditions
♦ Opinion of the auditor on the financial statements of the
company.
♦ Information disclosure regulations.
♦ Organizational structure (board of directors, control board,
executive board)
♦ Securities depository
♦ Regulations on election of the board of directors.
♦ Other requirements

NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ 358

 1.1 Enterprises consulting on listing securities

For example: Conditions for listing at Ho Chi Minh City Stock

Exchange
Being a joint stock company, charter capital of VND 120 billion or more.
At least 02 years operating as a JSC
Minimum ROE of at least 5%
Business activities of two years preceding the year of listing registration must
be profitable; have no overdue debts with more than 01 year; no accumulated
loss up to the year of listing registration;
Comply with law on accounting of financial statements
Disclose all debts to the company of the Board of Directors, CEOs, the Chief
Accountant, major shareholders and related persons;

NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ 359

 1.1 Enterprises consulting on listing securities

1.1.2 Condition for listing securities

For example: Conditions for listing at Ho Chi Minh City Stock
Exchange (cont.)
• At least 20% of the voting stock of the company is held by at least
three hundred (300) non-major shareholders.
• Shareholders are members of the Board of Directors, the
Supervisory Board, and the Chief Accountant of the company or the
major shareholders are related people must commit to hold 100% of
their own shares within 06 months from the listing date and 50% of
these shares within the next 06 months.
• Having a stock listing registration form according to regulations.

NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ 360

 1.1 Enterprises consulting on listing securities

1.1.2 Condition for listing securities

Homework:
Please find out the listing conditions of some of the following stock
exchanges:
–New York Stock Exchange (NYSE)
–Hongkong Stock Exchange
–Singapore Stock Exchange (SGX)
Instructions: you can find this information on the stock exchange
website.

NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ 361

1.1 Enterprises consulting on listing securities
Advantages of listing securities
• High ability to attract capital
• Increase liquidity for securities.
• The company has better public relations.
• Determining stock prices more equitably
• The reputation of issuers is higher.
• Tax preferences

NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ 362

1.1 Enterprises consulting on listing securities
Disadvantages of listing securities
Information disclosure
• Easily acquired through M&A activities
• High profit pressure
• Listing costs

NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ 363

1.1 Enterprises consulting on listing securities

1.1.4 Types of listings

Listing for the first time
Additional listing
Cross listing
Backdoor listing

NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ 364

 1.1 Enterprises consulting on listing securities

1.1.4 Types of listings

 Listing for the first time:
When the issuing institutes meet the listing requirements.
They can register for listing securities for the first time after the
issuance to the public (IPO),
Additional listing:
Issuing institute has been listed on Stock Exchange, lists
more newly issued shares for the purpose of increasing capital,
paying dividends, convertible bond...

365
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 1.1 Enterprises consulting on listing securities

1.1.4 Types of listings

 Cross listing
Securities of enterprises both listed and traded on domestic stock
market and listed and traded on foreign stock market.
Backdoor listing
An unqualified enterprise uses the acquisition or merger method
to gain control of a listed company and automatically lists its
share on the stock market by changing the name of the listed
stock.

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 1.1 Enterprises consulting on listing securities

1.1.5 Process of listing securities

Step 1 Step 2 Step 3 Step 4

Customer Prepare and Introducing,

contact and submit announcing
information Supporting
listing listing and
and listing companies
consulting depository
securities after listing
documents

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 1.1 Enterprises consulting on listing securities

1.1.5 Process of listing securities

Step 1
 Listing benefits
 Consultants choose Stock exchange to list
 Listing conditions
Customer  Listing time
contact and  Type of listing

listing  ... Convince customers.

consulting

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 1.1 Enterprises consulting on listing securities

1.1 Process of listing securities

Step 2
Prepare documents
+ Registration file to list as prescribed
Prepare and + Shareholder book (within 1 month)
submit + Prospectus
listing and Submit documents
depository
+ Application method
documents
+ Time to resolve records
Reference: HSX listing process

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 Process of listing securities

Submit documents

Reject
Approval Re-prepare documents
as required
Stock Echange approves in
principle

Finalize and complete the

shareholder book

Complete the depository registration procedure

with the securities depository center

Complete additional documents with Stock

Exchange
Investors deposit securities buy
themselves

Stock Exchange grants approval

decision
 1.1 Enterprises consulting on listing securities

1.1 Process of listing securities

Step 3
 Disclosure of listing information
+ Content of publication
Introducing, + Method of publication
announcing + Quantity
information  Roadshow
and listing  Coordinate with Stock Exchange to
securities prepare transaction opening ceremony
 Opening transaction

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 1.1 Enterprises consulting on listing securities

1.1 Process of listing securities

Step 4

 Stable stock price

 Maintain listing conditions
Supporting
companies  Change listing when required (cancel
after listing listing, transfer...)
 Other needs of the companies

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 1. Business & Finance Consulting

1.2 Consulting on changing form of enterprises

1.2.1 Concept
1.2.2 Purpose of changing form of enterprises
1.2.3 Type of changing form
1.2.4 Equitization of state enterprises
1.2.3 Process of changing form

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 1. Business & Finance Consulting

1.2 Consulting on changing form of enterprises

1.2.1 Concept on changing form of enterprises

Conversion of enterprise forms can be understood as
changing the form of organization and structure of enterprises
from one form to another according to the provisions of law.
The converted enterprise will cease to exist legally. However,
in reality, that enterprise is still operating, just in a different
form. This means that the debts, obligations, and interests of
the old enterprise are transferred to the new enterprise.

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 1. Business & Finance Consulting

1.2 Consulting on changing form of enterprises

1.2.1 Concept on changing form of enterprises

Changing form of enterprise is a form of restructuring the
enterprise to suit the scale and development of the Enterprise.
After transformation, the converted company ceases to exist,
the converting company is entitled to lawful rights and
benefits, takes responsibility for unpaid debts, labor contracts
and obligations.

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 1. Business & Finance Consulting

1.2 Consulting on changing form of enterprises

1.2.2 The purpose of transforming the form of

enterprises
Consistent with the size and development of businesses
Strategies in private equity investment and venture capital
investment
StateRegulations (SOE  1 member Ltd  Joint stock
company)

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 1.2 Consulting on changing form of
enterprises

1.2.3 Type of transformation

Private enterprise

1 member Ltd 2 member Ltd

Joint stock company

NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ

 1.2 Consulting on changing form of
enterprises

1.2.3 Type of transformation

 Transformed from a private enterprise into a one-member limited liability company
 Transformed from a private enterprise into a two-member limited liability
company
 Conversion from one member limited liability company to two member limited
liability company
 Converted from one member limited company to joint stock company
 Converted from a two-member limited liability company into a one-member
limited liability company
 Converted from a two-member limited liability company into a joint stock
company
 Transformed from a joint stock company into a two-member limited liability
company
 Conversion from a joint stock company into a one-member limited liability
company;

NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ

 1.2 Consulting on changing form of
enterprises

1.2.3 Type of transformation

 Private enterprise  1 member Ltd: The
Private owner of a private enterprise must be the
enterprise owner of the company
 Private  2 member or more Ltd: The
owner of the company is also a member
of the company.
1 Member Ltd

2 Member and more Ltd

NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ

 1.2 Consulting on changing form of
enterprises

1.2.3 Type of transformation

(1) The owner of the company
transfers/gives/donates a part of his/her
1 Member Ltd ownership in the Company to one or
some other people.
(2) A person buy or is donated from
other owners of the company

2 Member and more Ltd

NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ

 1.2 Consulting on changing form of
enterprises

1.2.3 Type of transformation

1 Member Ltd  Limited Liability Company with less than 3

members  mobilize more to enough 3 or
more members transforming into JSC.
2 Member and more Ltd  JSC 1 member Ltd: 1 shareholder receives
the transfer of all shares of other members
 JSC  2 or more member Ltd.
+Number of share holder: 2  50
+ Number of share holder > 50

Jsc

NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ

 1. Business & Finance Consulting

1.2 Consulting on changing form of enterprises

1.2.4 Equitization of state enterprises
 Equitized enterprises
 Equitization conditions
 Equitization form
 Subjects buying shares
 Methods of determining enterprise value
 (Reference: Nghị định 126/2017/NĐ-CP về chuyển doanh nghiệp Nhà nước, công
ty TNHH một thành viên do doanh nghiệp Nhà nước đầu tư 100% vốn thành công
ty cổ phần)

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 1.2 Consulting on changing form of enterprises

1.2.4 Equitization of state enterprises

 Equitized enterprises
 One member limited liability company with 100% state owned charter
capital, is the parent company of a Group.
 One-member limited liability companies which are wholly owned by the
State, are enterprises of ministries; ministerial-level agencies; government
agencies; People's Committees of provinces and cities under central
authority.
 Enterprises with 100% state capital have not been converted into one-
member limited liability companies

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 1.2 Consulting on changing form of enterprises

1.2.4 Equitization of state enterprises

 Equitization conditions
Not belonging to group which the state need to hold
100% of charter capital. (The list of enterprises in
which the State holds 100% of charter capital is
decided by the Prime Minister in each period)
Remain the state capital after being financially
processed and re-evaluated the value of businesses.

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 1.2 Consulting on changing form of enterprises

1.2.4 Equitization of state enterprises

 Subjects buying shares
Domestic investors
Foreign investors
Strategic investors

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 1.2 Consulting on changing form of enterprises

1.2.4 Equitization of state enterprises

 Equitization form
 Maintain the current state capital in businesses, issue more
shares to increase charter capital.
 Sell a part of existing state capital in enterprises or combine
to sell part of the State capital and issue more shares to
increase charter capital.
 Sell all existing state capital in enterprises or combine to sell
all state capital and issue more shares to increase charter
capital.

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 1.2 Consulting on changing form of enterprises

1.2.4 Equitization of state enterprises

 Methods of determining enterprise value
 Methods of determining enterprise value include: asset method,
discounted cash flow method and other methods.
 Enterprise value determined and announced must not be lower
than enterprise value determined by the asset method.

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 1.2 Consulting on changing form of enterprises

1.2.5 Process of Equitization

Step 1: Develop an equitization plan
Step 2: Organize the implementation of equitization plan
Step 3: Complete the transformation of a business into a joint
stock company

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 CHAPTER 6: ENTERPRISES
CONSULTING SERVICE

2. Business Restructuring Consulting

2.1 Consulting on capital restructuring

2.2 Consulting on management restructuring

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 2. Business Restructuring Consulting

2.1 Consulting on capital restructuring

2.1.1 Concept of capital restructuring consultancy

2.1.2 Theoretical basis of capital restructuring
2.1.3 Purpose of capital restructuring
2.1.4 Arising problems need to restructure capital sources and
solutions
2.1.5 Consultancy process for capital restructuring

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 2.1 Consulting on capital restructuring

2.1.1 Concept of capital restructuring consultancy

A financial restructuring involves making material
changes to the company's capital structure as a means of
enhancing shareholder value.
P530, Jerilyn J. Castillo and Peter J. McAniff, The practitioner’s guide to
investment banking: mergers & acquisition, coporate finance, first edition,
2007, Circinus Business Press

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 2.1 Consulting on capital restructuring

2.1.1 Concept of capital restructuring consultancy

Consulting on capital restructuring is an advisory activity
in which IB helps businesses select, build and form an appropriate
capital structure to maximize the value of the business.
Consulting to build an appropriate capital structure will
depend on the specific characteristics, separate at each stage of
development of the business, as well as of each different
enterprise.

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 2.1 Consulting on capital restructuring

2.1.2 Theoretical basis of capital restructuring

 (Trade-off theory of capital structure)
(The modern theory of capital structure and capital
cost)

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 2.1 Consulting on capital restructuring

2.1.2 Theoretical basis of capital restructuring

Profit margins and marginal costs of businesses will
increase with increasing debt use; Therefore, to optimize
business value, businesses must focus on choosing the
trade-off of these two factors through deciding how much
equity and how much debt to finance for company
activities
 the optimal capital structure

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 Trade-off theory of capital structure
The value of enterprise

(Optimal company value)

The value of the business when

Capex
only taking into account the
benefits of using debt

Enterprise value Enterprise value

without debt using debt

0 (Optimal capital structure) leverage

 Arising problems need to restructure capital sources and solutions
Restructuring
Issues Causes manifestations
solution

Increasing equity /
1. Business losses cause Revenues and profits decrease
selling assets to repay /
a deficit of equity strongly, often lose liquidity
convert debt into equity

Reduce receivables to
2. Occupied capital too Receivables increase, cash is
pay debt / increase
much scarce
Too high debt equity
balance Provisions and receivables Sell bad debt / reduce
negatively affects 3. High bad debt increased sharply, cash is receivables to pay
businesses scarce debt / increase equity

4. Investing too much in

cash is scarce Increase equity
fixed assets

Revenue, profits, and assets Consider selling the

5. Hot growth increased rapidly but cash is inefficient projects /
scarce increasing equity

Debt balance is Growth rate of revenue and

Lack of future
too low or none, profit decreased / ROE Reduce equity /
expansion plans or
detrimental to decreased / Excessive cash perform M&A
projects
the business much
 Arising problems need to restructure capital sources and solutions

Restructuring
Issues Causes manifestations
solution
Stock market
Issuance of bonds,
plummeted
taking money to buy
stocks (in case
Speculative factors enterprises lack
Stock prices fall
pushed prices down Stock prices plummeted for money,)
below intrinsic
a long time
value
Share repurchase,
Investors have not
increase demand for
looked exactly the true
stocks, EPS and ROE
value of the business
increase
Stock prices fall below
intrinsic value
Share repurchase in
A lot of floating order to decrease
The company is common stock on floating common stock
Acquisition information
the target of market appears
acquisition
Good company
Issuing share to
strategic investors
A lot of cash
 Process of capital structure consultancy

Not suitable

Research Make initial

Establish an Hypoth
practical hypotheses
advisory group esis test
information

Phù hợp

Develop a
restructuring plan

Reject Evaluation
Adjust the of Implement
restructuring plan
Restructurin
g Process
plan

Approval

Finish
 Process of capital structure consultancy

S 6: Implement plan
One or more of the following solutions may be implemented:
•Negotiate with one or some partners
•Organize the Shareholder meeting to approve a restructuring solutions
•Securities Issuance
•Share repurchase
•……

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NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ
 Process of capital structure consultancy

S7: Evaluation of Restructuring plan

 Does restructuring plan solve the problems of
enterprises?
 If yes  finish
 If not S 8: Adjust the restructuring plan.
.

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NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ
 CHAPTER 6: ENTERPRISES
CONSULTING SERVICE

2. Business Restructuring Consulting

2.1 Consulting on capital restructuring

2.2 Consulting on corporate governance restructuring

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 2. Business Restructuring Consulting

2.2 Consulting on corporate governance restructuring

2.2.1 Concept
2.2.2 The importance of corporate governance
2.2.3 Content of corporate governance consultancy
2.1.5 Process of Corporate governance consulting

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 2.2 Consulting on corporate governance
restructuring

2.2.1 corporate governance

 "Corporate governance is a system that is built to control and supervise
businesses. The CG structure shows how the rights and responsibilities
are distributed among the Board of Directors. Management, shareholders,
and other relevant stakeholders.
 CG also explains the rules and procedures for making decisions related
to business operations. In this way, CG also provides a structure. through
which people set company goals, and also achieve their goals or monitor
their performance, "OECD 4/1999.
 "Corporate governance can be understood in narrow sense as the
relationship of a company with its shareholders, or in the broad sense as
the relationship of a business with society....", Financial Times [1997].

NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ

 2.2.2 The importance of corporate governance

- Increase the access ability to finance.

- Reduce expenditure cost and improve value
- Improve operational capacity: better allocation of resources creates
wealth
- Reduce risk
- Improving relations between beneficiaries

NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ

 2.2.3 Content of corporate governance
consulting

 Building vision and business strategy

 Design and organizational restructuring
 Human resources
 Building management system
 Develop internal management regulations
 Human resource development plan
 Building salary and bonus system

NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ

 CHAPTER 7
RESEARCH AND BROKERAGE

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 CHAPTER 7: RESEARCH AND
BROKERAGE

Content

1. RESEARCH

2. BROKERAGE

NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ 412

 CHAPTER 7: RESEARCH AND
BROKERAGE

1. RESEARCH

1.1 Concept

1.2 Research activities

1.3 Conflicts of interest in research activities

NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ 413

 1. RESEARCH

1.1 Concept and classification of research functions

1.1.1 Concept
Research is a function of the Investment Bank that conducts
the collection, evaluation and analysis of macroeconomic information,
industries, securities, businesses on the market ... The research
activities help customers have the information needed to make
flexible investment decisions in a timely manner.

NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ 414

 1. RESEARCH

1.1 Concept and classification of research functions

1.1.2 Classification
•Research to serve the seller(Sell Side)

•Research to serve the buyer (Buy Side)

•Independent research

NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ 415

 1. RESEARCH

1.1 Concept and classification of research functions

1.1.2 Classification
Research to serve the seller
Investment banks will analyze/research the financial
products that IB is on behalf of their clients (sell side) to sell.

NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ 416

 1. RESEARCH

1.1 Concept and classification of research functions

1.1.2 Classification
 Research to serve the buyer
Research activities of investment banks with the goal of
providing research products to customers (buy side), thereby helping
customers to make buying decisions.

NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ 417

 1. RESEARCH

1.1 Concept and classification of research functions

1.1.2 Classification
 Independent research
Research activities of investment banks that do not cater to
specific sellers or buyers. Independent studies may include
macroeconomic research, market research, industry research, etc.

NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ 418

 1. RESEARCH

1.2 Research reports

1.2.1 Macroeconomic research

1.2.2 Industry research
1.2.3 Research securities with fixed income
1.2.4 Equity securities research
1.2.5 Research the indexes
1.2.6 Research analytical tools
(Reference: https://www.ubs.com/global/en/investment-
bank/institutions/securities-research.html)

NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ 419

 1. RESEARCH

1.2 Research reports

1.2.1 Macroeconomic research
These reports focusing on macroeconomic analysis such
as economic growth, monetary policy, fiscal policy, balance of
payments, trade balance, inflation, interest rates and exchange
rates ...
1.2.2 Industry research
These researches focus on analyzing the general situation
of a specific industry such as sugar industry, rubber, construction,
finance, airline, F&B, utilities, ICT, distribution, Pharmacy,
transportation...

NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ 420

 1. RESEARCH

1.2 Research reports

1.2.3 Research securities with fixed income
These researches focus on analyzing fixed-income
securities such as bonds and derivatives.
For example: Government bonds, corporate bonds,
future or options from bonds
Question: In your opinion, which factors most affect the
volatility of bond prices?

NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ 421

 1. RESEARCH

1.2 Research reports

1.2.4 Equity securities research
Research reports focus on equity securities analysis such
as stocks of companies.
Equity securities research products include:
- Stock research report of each company
- Report on stock investment strategies

NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ 422

 1. RESEARCH

1.2 Research reports

1.2.3 Equity securities research
Stock research report of each company
-Specific analysis of the operational situation, financial situation
of the company
-Factors affecting the operation of the company
-Predict the future development of the company.
 recommend buying, selling or holding stocks

NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ 423

 1. RESEARCH

1.2 Research reports

1.2.4 Research the indexes
Investment banks create their own set of indicators to serve their
customers in addition to the general index of the market.
The built indexes include equity stock index and debt index (bond).
For example: VSI (Vietnam Securities Indexes) and VBI (Vietnam
Bond Index) of Woori Securities Company
EAFE Index of Morgan Stanley Capital International

NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ 424

 1. RESEARCH

1.2 Research reports

1.2.5 Research analytical tools
These are research reports that IB supplies to its clients
based on a technology platform, enables customers to conduct
their own analysis of securities according to their needs.

NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ 425

426
427
 1. RESEARCH

1.3 Conflicts of interest in research activities

1.3.1 The causes of conflict
 Benefits from underwriting activities
For example, in underwriting activities, the investment
bank stands out as a securities underwriting, in case the
investment bank wants to issue securities at high prices, it may
force the research department to issue the positive analysis
Benefits from appropriate trading
Internal information leak from consulting activities

NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ 428

 1. RESEARCH

1.3 Conflicts of interest in research activities

1.3.1 Conflict management policy

•Building a "hard partition" between parts
•Develop a "soft partition" policy through a compliance
monitoring department
•Develop operational policies for the bank to ensure the
independence of the research department.

NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ 429

 2. BROKERAGE

2.1 Brokerage

2.1.1 Concept
2.1.2 Function
2.1.3 Process
2.1.4 Trading on Stock Exchange.

NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ 430

 2.1 Brokerage

2.1.1 Concept

Securities brokerage is a function of securities

companies, Securities companies act as an intermediary to
buy or sell securities for customers.
Article 6 of the Securities Law 2006

NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ 431

 2.1 Brokerage

2.1.1 Concept
Securities brokerage means an investment bank's act as an
intermediary to carry out securities transactions for its customers,
thereby receiving a fee for performing the brokerage. The
investment bank is responsible for following customers' orders and
is not responsible for the results of such transactions.

NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ 432

 2.1 Brokerage

2.1.2 Function of brokerage

Perform trading securities for customers by receiving orders from
customers and through the trading mechanism of the Stock
Exchange to find the best prices for customers and the customers
must take full responsibility for the investment results. .
Providing services and utilities to help customers make their
decisions, such as: direct investment consultancy for customers,
helping customers to choose types of securities, time of purchase /
sale; providing financial reports with research and analysis, making
comments on price trends and investment recommendations;
provide information on listing organizations.

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NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ
 2.1.3 Process of brokerage
Step 1 Open account

Step 2 Consulting customers on stock

transactions

Step 3 Receive orders from customers

Step 4 Execute orders

Step 5 Confirm transaction results for customers

Step 6 Payment and clearing transactions

Step 7
Payment and receipt of securities
434
 2.1.3 Process of brokerage

Step 1 Account type: Cash

Open account account, deposit account,
margin account ...
Customer information
Step 2 Consulting customers on stock + Investment objective
transactions + Level of risk acceptance
+ Property
Step 3 + Understanding of
Receive orders from customers
investment
+ Investment experiment
Step 4 Execute orders

Step 5 Confirm transaction results for

customers

Step 6 Payment and clearing transactions

Step 7 Payment and receipt of

securities
435
 2.1.3 Process of brokerage

Step 1 Open account

Consulting customers on stock - Order functions, order

Step 2 types ...
transactions
- Type of investment
securities, portfolio
Step 3 Receive orders from customers structure
- Time of transaction
(buying, selling)
Step 4 - Subscribe and update
Execute orders
information

Step 5 Confirm transaction results for

customers

Step 6 Payment and clearing transactions

Step 7 Payment and receipt of

securities
436
 2.1.3 Process of brokerage

Step 1 Open account

Step 2 Consulting customers on stock

transactions

Step 3 Receive orders from customers - Check the validity of the

trading order
- Check money account if
Step 4 Execute orders it's a purchase
- Check stock account

Step 5 Confirm transaction results for

customers

Step 6 Payment and clearing transactions

Step 7 Payment and receipt of

securities
437
 2.1.3 Process of brokerage

Step 1 Open account

Step 2 Consulting customers on stock

transactions

Step 3 Receive orders from customers

Step 4 Execute orders

Step 5 Confirm transaction results for

customers

Step 6 Payment and clearing transactions

Step 7 Payment and receipt of

securities
438
 2.1.3 Process of brokerage

Step 1 Open account

Step 2 Consulting customers on stock

transactions

Step 3 Receive orders from customers

Step 4 Execute orders

- Confirm by phone
Step 5 Confirm transaction results for -Confirmation by Sms
customers -Confirm by email
-Confirm by monthly
Step 6 Payment and clearing transactions statement

Step 7 Payment and receipt of

securities
439
 2.1.3 Process of brokerage

Step 1 Open account

Step 2 Consulting customers on stock

transactions

Step 3 Receive orders from customers

Step 4 Execute orders

Step 5 Confirm transaction results for

customers

Step 6 Payment and clearing transactions

Step 7 Payment and receipt of

securities
440
 2.1.3 Process of brokerage

Step 1 Open account

Step 2 Consulting customers on stock

transactions

Step 3 Receive orders from customers

Step 4 Execute orders

Step 5 Confirm transaction results for

customers

Step 6 Payment and clearing transactions

Step 7 Payment and receipt of

securities
441
 2.1 Brokerage

2.1.4 Trading securities at Stock exchange

 General provisions on transactions
•Types of trading orders
•Transaction time
•Unit price
•Price fluctuation range
•Forms of matching orders
 Trading securities at HoSE and HNX

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 2.1.4 Trading securities at Stock exchange

 Trading orders
It is a customer's (investor's) request for a broker to make securities
transactions at their demand.
Types of order.
• Based on the transaction direction
• Based on the validity period of the order
• Based on the scale of the order
• Based on price and transaction conditions

NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ 443

 Trading orders

Based on the Based on the scale Based on the validity Based on price and
transaction direction of the order period of the order transaction conditions

(Buy Order) Odd lot order DAY ORDER Limit order

Round Lot Good through Market order

(Sell Order)
order week order

Good through ATO, ATC

(Cancel Order) Large order
month order

GOOD TILL Stop order

CANCELED

Stop limit order

444
 Limit Order – LO

• A type of order in which a customer sets a limit price.

• A buy limit order is an order to purchase an asset at or below a

specified price, allowing traders to control how much they pay.
By using a limit order to make a purchase, the investor is
guaranteed to pay that price or less

• A sell limit order is an order which follows the specified price

or higher (minimum selling price)

NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ 445

 Market Order – MO

• An order that must comply with the best price available in

the market

• The order is almost certainly done

• The most popular order in stock trading

NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ 446

 Lệnh ATO, ATC

 ATO: At The Opening

This is securities trading order at the opening price
 ATC: At The Closing
This is securities trading order at the closing price

NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ 447

 Stop Order – SO

• When the market price touches or exceeds a price that a

predetermined investor with a broker (stop price), the order will be
triggered as a market order.
• 2 Types of stop order:
- Buy stop order
- Sell stop order
• Actually, this is a "hanging" market order.

NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ 448

 Stop Order

Buy Stop Order

•Customer sets a stop buying price higher than the current market
price of the same securities.
•Orders that are triggered will be executed at market prices.
•Often used to limit losses in short sales

NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ 449

 Stop Order
Sell Stop Order
•Customer sets a stop selling price lower than the current market
price of the same securities.
•When activated, the order will be executed at market price.
•Customer predicts an increase in the stock price in the future. A
sell stop order is used to protect profits or limit losses in case of
false prediction.

NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ 450

 Stop Limit Order

• when the market price touches or exceeds a price that the

investor pre-set with the broker (stop price), the order will
be activated as a limit order.
• 2 types of stop limit order:
- Buy stop Limit Order
- Sell stop Limit Order

NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ 451

 2.1.4 Trading securities at Stock exchange

 Trading time
 Unit price and listed price
 Price fluctuation range
It is the highest limit (ceiling price) and lowest price (floor price)
of securities prices allowed to change during the session.

NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ 452

 2.1.4 Trading securities at Stock exchange

 Orders matching
An order-based auction system whereby trades are executed
based on reciprocal orders entered into the stock exchange's
trading system.
2 Type of orders matching:
• Periodic order matching
• Continuous order matching

NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ 453

 Orders matching
Periodic order matching
•Performing on the basis of matching buy and sell orders entered
into the trading system for a specified period of time
•Determining the fixing price right after the end of the order entry
period.
•Periodic order matching is often used to determine the closing
price and the opening price of securities during the trading
session.

NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ 454

 Orders matching

Continuous order matching

A transaction made on the basis of matching buy and
sell orders immediately when the order is entered into the
trading system.

NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ 455

 Orders matching
Matching principle
• Price priority
• Time priority
• Customer priority
• Priority in quantity
• Random priority

NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ 456

 CHƯƠNG 7: RESEARCH AND
BROKERAGE

2. BROKERAGE

2.1 Brokerage

2.2 Electronic transaction

NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ 457

 2. BROKERAGE

2.2 Electronic transaction

2.2.1 Reading the trading board

2.2.2 Online trading

NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ 458

 2.2 Electronic transaction

2.2.1 Reading the trading board

2.2.1.1 General information on trading board
Transaction time, session
Change of index (relative and absolute numbers)
Trading volume and matched value.
Color specified in the transaction

NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ 459

 2.2 Electronic transaction

2.2.1 Reading the trading board

2.2.1.2 Transaction information of each stock
Ticker
Reference price, ceiling price, floor price
Excess buying (volume, price), selling surplus (volume, price)
Matched price match and matched volume

NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ 460

461
 2. Electronic transaction

2.2.2 Online trading

2.2.2.1 Concept
Online securities trading is a form of trading allowing
customers to access information and buy and sell securities via the
Internet.

NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ 462

 2.2 Electronic transaction

2.2.2.2 Online trading

Step 1: Customers register for online trading with securities

companies, after successful registration, customers will be provided
with the account and information and necessary equipment to log in.
Step 2: The customer logs in to the website or the software of the
securities company.
Step 3: Customers execute their transactions: buying, selling, edit,
canceling orders, checking stock balances, cash balances, etc.
Step 4: View transaction results and print statements

NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ 463

 2.2 Electronic transaction

 Benefit of online trading

 Customers can execute orders anytime, anywhere
 Fast transfer and processing speed
 Keep track of transaction and other account information
 Preferential transaction fees.
 Limit of online trading
 Customers can only execute transactions when there is connected
internet and connected equipment.
 Security risks when customer information is disclosed

NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ 464

 Periodic order matching

Bid Price Ask

B1 1700 15.1 1400B8

B2 1500 15.2 6700B9
B3 8400 15.3 7500B10
B4: 4000; D1:2000 15.4 6000B11
B5 4200 15.5 5300 B12
B6 9300 15.6 4500B13
B7 7500 15.7 7000B14

NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ 465

 Periodic order matching

Firstly, calculate the total volume of securities bought and sold at each
price

Bid Price Ask

1700 15.1 1400
1500 15.2 6700
8400 15.3 7500
6000 15.4 6000
4200 15.5 5300
9300 15.6 4500
7500 15.7 7000
NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ 466
 Periodic order matching
Secondly, cumulate volume of buy orders starting from the buy order with the highest price,
and cumulate volume of sell order started from the sell order with the lowest price.

Bid Ask
Price
Volume Cumulate Cumulate KL
1700 38600 15.1 1400 1400
1500 36900 15.2 8100 6700
8400 35400 15.3 15600 7500
6000 27000 15.4 21600 6000
4200 21000 15.5 26900 5300
9300 16800 15.6 31400 4500
7500 7500 15.7 38400 7000
NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ 467
 Periodic order matching

Thirdly, match the volume of securities accepted to buy and the volume of securities
accepted to buy to determine the volume of securities that can be traded at each price.

Bid Ask
Matched
Price
Vol Cum Cum Vol volume

1700 38600 15.1 1400 1400 1400

1500 36900 15.2 8100 6700 8100
8400 35400 15.3 15600 7500 15600
6000 27000 15.4 21600 6000 21600
4200 21000 15.5 26900 5300 21000
9300 16800 15.6 31400 4500 16800
7500 7500 15.7 38400 7000 7500
NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ 468
 Periodic order matching
Principle 1: matched price (fixing) is defined as the price at which the largest volume
of securities is bought and sold

Bid Ask
Matched
Price
Vol Cum Cum Vol Vol

1700 38600 15.1 1400 1400 1400

1500 36900 15.2 8100 6700 8100
8400 35400 15.3 15600 7500 15600
6000 27000 15.4
15.4 21600 6000 21600
4200 21000 15.5 26900 5300 21000
9300 16800 15.6 31400 4500 16800
7500 7500 15.7 38400 7000 7500

NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ 469

 Periodic order matching
If there is a different price with the same maximum matched
Principle 2:
volume, the price closes to the latest matched price will be determined as
the matching price.
Bid Ask
Price Matched vol
Vol Cum Cum Vol
1700 39200 15.1 1400 1400 1400
1500 37500 15.2 8100 6700 8100
8400 36000 15.3 15600 7500 15600
6000 27600 15.4 21600 6000 21600
4800 21600 15.5 26900 5300 21600
9300 16800 15.6 31400 4500 16800
7500 7500 15.7 38400 7000 7500

NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ 470

 Periodic order matching
Principle 3: In case of having the same price with the same highest matched
volume, same close to the reference price, the higher price will be selected as the
matching price.

Bid Ask
Price Matched vol
Vol Cum Cum Vol
1700 25700 15.1 1900 1900 1900

1500 24000 15.2 10600 8700 10600

2400 22500 15.3 20100 9500 20100

15.5
3800 20100 15.5 25400 5300 20100

8800 16300 15.6 29900 4500 16300

7500 7500 15.7 36900 7000 7500

NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ 471

 Distribution
Bid Ask
Matched
Price
Vol
Vol Cum Cum Vol
Detail Detail

B1 1700 37600 15.1 1400 1400B8 1400

B2 1500 35900 15.2 8100 6700B9 8100

B3 8400 34400 15.3 15600 7500B10 15600

B4: Bid 600, bid suplus
34004000; D1:2000
B4: 27000 15.4 21600 6000B11 21600
D1: bid suplus 2000
B5 4200 21000 15.5 29900B12: 3000; D2:5300 21000

B6 9300 16800 15.6 34400 4500B13 16800

B7 7500 7500 15.7 41400 7000B14 7500

NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ 472

 Remained
Bid Ask
Price
Name Vol Name Vol
B1 1700 15.1    
B2 1500 15.2    
B3 8400 15.3    

B4: 3400; D1: 2000 15.4    

15.5
    B12: 3000; D2:5300
    15.6 4500 B13
    15.7 7000 B14

NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ 473

 Extend case
• Periodic order matching determines the open price with ATO orders

• Periodic order matching determines the closing prices with ATC orders

Displaying the order book

(1) ATO (ATC) orders are higher than the highest bid for the buy order and
lower than the lowest ask for the sell order.

(2) ATO (ATC) orders are prioritized for delivery before the limit order (LO)

NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ 474

 Continuous order matching
Bid Ask Bid Ask
Price Price
Name Vol Name Vol Name Vol Name Vol

15.1 15.1
B1 1700     B1 1700    
B16: 25000, MP
15.2 15.2
B2 1500     B2 1500    
15.3 15.3
B3 8400    B15: 2000 B3 8400    
B4: 1400;
15.4 15.4
15.4
B4: 1400; D1: 2000     D1: 2000    
B12: 3000;
1400 B12: 3000;
15.5 15.5
    D2:5300     D2:5300
15.6 15.6
    B13 B13     4500 B13
15.7 15.7
    B14 B14     7000 B14

NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ 475

Trading with market orders at HoSE and HNX
•MP, MTL

•MOK

•MAK

NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ 476

 Extended case

Marker order : MP, MTL Bid Vol Price Ask Vol Matche
Bid Vol Price Ask Vol d
  16.2    
  16.2  
  16.1    
  16.1   1000
  16 1000  
  16 1000 1000
MP:  5000:   15.9 2000  
15.9 2000 2000
  15.8 1000  
  15.8 1000 1000
2000 15.7    
2000 15.7  

NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ 477

 Extended case

Market order: MOK Bid Vol Price Ask Vol Matche

Bid Vol Price Ask Vol d
  16.2    
  16.2  
  16.1    
  16.1  
  16 1000  
  16 1000
MOK: 5000: MOK:  5000: 15.9 2000  
  15.9 2000
  15.8 1000  
  15.8 1000
2000 15.7    
2000 15.7  

NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ 478

 Extended case

Market order: MOK Bid Vol Price Ask Vol Matche

Bid Vol Price Ask Vol d
  16.2    
  16.2  
  16.1    
  16.1  
  16 1000  
  16 1000
MOK: 3000:   15.9 2000  
  15.9 2000 2000
  15.8 1000  
  15.8 1000 1000
2000 15.7    
2000 15.7  

NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ 479

 Extended case

Market order: MAK Bid Vol Price Ask Vol Matche

Bid Vol Price Ask Vol d
  16.2    
  16.2  
  16.1    
  16.1   1000
  16 1000  
  16 1000 1000
MAK: 5000:   15.9 2000  
  15.9 2000 2000
  15.8 1000  
  15.8 1000 1000
2000 15.7    
2000 15.7  

NGHIỆP VỤ NGÂN HÀNG ĐẦU TƯ 480