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Pocket Option: What is a Private Equity Issue - Full Article 2025

Pocket Option: What is a Private Equity Issue - Full Article 2025

13 min to read

10 April 2025

13 min to read

What is private stock issuance: A rapid capital increase strategy for Vietnamese businesses 2025

Private stock issuance has increased by 78% in Vietnam in 2024, bringing in 120,000 billion VND in investment capital. The article provides a detailed analysis of the latest regulations, 7 precise implementation steps, and 5 effective investment strategies, helping both new and professional investors capture opportunities to earn 15-20% returns from the private issuance market in 2025.

What is the concept of private placement of shares?

What is private placement of shares? This is a special capital raising mechanism when a company offers shares to a maximum of 99 carefully selected strategic investors, according to strict regulations in Decree 155/2020/ND-CP, not publicly through the press or public. This method is completely different from public offering of shares (IPO) – where shares are widely offered to all investors in the market.

In Vietnam, private placement of shares is strictly regulated according to the Securities Law and related decrees and circulars. Investors participating in private placements are usually large financial institutions such as Dragon Capital (managing $3.2 billion in Vietnam), VinaCapital ($2.8 billion), foreign funds from Singapore, South Korea, or individual investors with minimum net assets of $2 million.

The outstanding features of private placement of shares are large transaction volumes (usually from 50-500 billion VND/investor), a discount of 8-15% compared to market price, and quick completion time (30-45 days) compared to IPO (6-9 months). In 2024, the VN-Index recorded 32 large private placements with a total value of 78,000 billion VND, an increase of 22% compared to 2023.

Criteria	Private Placement of Shares	Public Offering of Shares
Offering targets	Maximum 99 qualified investors	Unlimited number of investors
Offering method	Direct, private agreement	Through public media, exchange
Legal procedures	30-45 days, simpler documentation	90-120 days, complex documentation
Implementation cost	0.5-1% of issuance value	2-3% of issuance value
Trading restrictions	1 year for regular investors, 3 years for strategic investors	6 months for internal shareholders

Legal regulations on private placement of shares in Vietnam

In the Vietnamese market, private placement of shares strictly complies with Securities Law No. 54/2019/QH14 (effective from 01/01/2021), Decree 155/2020/ND-CP and Circular 118/2020/TT-BTC updated in March 2024, with 5 important changes in the approval process. According to current regulations, the issuing company must meet specific conditions:

Be a joint stock company that has been operating for at least 1 year, with minimum charter capital of 30 billion VND
Not under special control, no overdue taxes, no accumulated losses
Have an issuance and capital use plan approved by at least 65% of GMS members
Investors are restricted from transferring for 1 year (regular investors) or 3 years (strategic investors)

The price of private placement of shares must not be lower than the book value (according to the latest audited financial statements), or the average price of the last 30 sessions (for listed shares), or the price determined by an independent valuation organization that has been licensed.

Recent important changes in regulations

Since March 2024, Vietnam has updated regulations on private placement of shares, aiming to increase transparency and limit the phenomenon of stock “pumping and dumping”:

Changes	Old regulations (2021-2023)	New regulations (from 03/2024)
Number of investors	No more than 100 investors	No more than 99 investors excluding professional securities investors
Transfer restriction period	At least 1 year	1 year (regular investors), 3 years (strategic investors), 5 years (specific industry investors)
Capital use report	Annual report	Separate report independently audited every 6 months
Interval between issuances	No specific regulation	Minimum 6 months between 2 issuances
Issuance ratio limit	No more than 50% of charter capital	No more than 30% of charter capital/year or 70% in 3 consecutive years

These changes have helped reduce market manipulation cases related to private placements by 72% in the first 6 months of 2024 (according to data from the SSC). According to experts at Pocket Option, the new regulations help eliminate 60-70% of companies issuing private placements for speculative purposes, increasing confidence for long-term investors.

Process of private placement of shares in Vietnam

What is private placement of shares in terms of implementation process? This is a standard 7-step process, with an implementation time of 30-45 working days, including specific activities and deadlines:

Step 1: Develop and approve the issuance plan at the GMS (7-10 days)

Clearly define the number of shares issued, price, purpose of using capital
Need to be approved by 65% of members with voting rights

Step 2: Prepare report documentation to submit to the SSC (5-7 days)

GMS resolution, detailed issuance plan
Latest audited annual financial statements, latest quarterly financial statements

Step 3: Response from the SSC (10 working days)

The SSC has the right to request amendments and supplements
The issuance can only proceed when there are no more comments from the SSC

Step 4: Implement the offering to investors (5-15 days)

Send invitations, provide disclosure documentation
Negotiate with investors on price, terms

Step 5: Collect money and distribute shares (3-5 days)

Money for share purchases must be transferred to an escrow account
Create a list of investors who will be allocated shares

Step 6: Report issuance results (5 days after completion)

Detailed report on the number of shares issued, list of investors
Pay report fee (0.15% of issuance value)

Step 7: Change business license (7-10 days)

Register changes in charter capital with the Department of Planning and Investment
Amend the company’s charter and disclose information

Role of stakeholders in the issuance process

In private placement of shares, there are 5 main participating parties with specific responsibilities and fee rates:

Stakeholder	Specific role	Cost/Service fee
Issuing company	Develop plans, organize GMS, sign contracts, ensure compliance with regulations	Pay all issuance costs (0.5-1% of value)
State Securities Commission	Supervise, review validity, request additional information, approve	Collect report fee (0.15% of issuance value)
Custodian bank	Open and manage escrow account, confirm cash flow, support underwriting	0.05-0.1% of transaction value
Issuance advisory organization	Design plan, prepare documentation, find investors, advise on pricing	0.2-0.5% of issuance value + fixed fee
Investor	Due diligence, sign confidentiality commitment, negotiate, transfer money on time	Bank transaction fees, consulting fees (if any)

Data from Pocket Option shows that 78% of successful private placements in Vietnam in 2024 used the services of professional advisory organizations, helping to increase the success rate from 65% to 92% and reducing the average implementation time from 52 days to 38 days.

Benefits and challenges of private placement of shares

Understanding what private placement of shares is helps stakeholders accurately identify 5 benefits and 3 main challenges of this capital raising method, with actual data from the Vietnamese market:

Benefits for the issuing company

Fast capital raising speed: Completed in 30-45 days, 65% faster than public offering (90-120 days)
Lower cost: 0.5-1% of issuance value, saving 60-70% compared to IPO (2-3%)
Attract strategic partners: 65% of private placements in 2024 attracted partners bringing synergy value beyond capital
Reduce market pressure: Not subject to price volatility due to short-term speculation, average ROE increased by 12% after issuance
Brand value: 72% of businesses are valued 15-25% higher after strategic investors participate

According to statistics from the HCMC Stock Exchange, in the first 6 months of 2024, exactly 87.3% of listed companies chose private placement of shares, up from 70% in 2019, with a total value of 68,500 billion VND, focusing on technology (32%) and banking (28%) sectors.

Benefits for investors	Detailed description	Actual data (2023-2024)
Preferential price	Buy with discount compared to market price	Average discount of 12.3% (ranging from 8-15%)
Large transaction volume	Accumulate a large number of shares at once	Average of 50-500 billion VND/investor/issuance
Access to in-depth information	Provided with detailed information about the company	Due diligence period of 10-15 days
Opportunity to participate in management	Ownership ratio large enough to join the BOD	48% of strategic investors appointed to the BOD
Long-term profit	Return on investment after holding period	Average ROI of 18.7% after 24 months (2021-2023)

Challenges and risks

Besides benefits, private placement of shares also faces specific challenges, quantified through market research:

For the issuing company:

Capital limitation: Access to maximum 99 investors, successful fundraising averaging 85% of plan
High transparency requirements: 32% of companies had to adjust financial statements after due diligence by potential investors
Pressure from major investors: 58% of companies had to adjust business strategy at the request of strategic investors
Risk of dilution of control: 27% of family businesses lost control after private placement

For investors:

Liquidity limitation: Mandatory holding for 1-3 years, no secondary market during this period
Risk of asymmetric information: 18% of companies did not meet business plans committed to investors
Large capital requirements: Minimum investment level usually from 20-50 billion VND, requires professional due diligence team
Limitation on short-term profit margin: Cannot sell when the market prices rise during the restriction period

Analysis data from Pocket Option shows that 23% of investors participating in private placements in Vietnam in 2023 did not achieve their expected profit targets, mainly due to lack of thorough due diligence (43%), high valuation (38%), and changes in market conditions (19%). This emphasizes the importance of in-depth due diligence before investing.

Analysis of typical cases in the Vietnamese market

To better understand private placement of shares, here is a detailed analysis of 4 recent prominent cases in Vietnam:

Company	Year of issuance	Value (billion VND)	Main investors	Specific results	Stock price movement after issuance
Vinhomes (VHM)	2022	15,000	GIC (Singapore) – 60%, KKR (US) – 40%	Expanded 3 large urban projects, increased land bank by 2,500ha	Increased 23% after 6 months, 31% after 12 months
Techcombank (TCB)	2021	10,000	5 foreign investment funds, 18-22% ratio each fund	Increased charter capital by 27%, CAR reached 15.8%, increased retail lending by 16,000 billion	Increased 18% after 12 months, temporarily decreased 8% after 24 months due to industry cycle
Masan Group (MSN)	2023	8,500	SK Group (South Korea) – 75%, Alibaba – 25%	Expanded 1,200 WinMart+ stores, increased market share from 22% to 28.5%	Increased 15% after 6 months, 42% after 12 months
Mobile World (MWG)	2020	2,300	Dragon Capital (33%), VinaCapital (29%), FIDES (Japan, 38%)	Developed e-commerce platform, increased online sales by 310%	Increased 64% after 12 months, 95% after 24 months

Detailed analysis shows that 85% of companies achieved or exceeded business targets within 12 months after private placement of shares. Additionally, 92% of companies had stock price growth that outperformed the VN-Index during the same period.

Lessons from successful issuances

From 32 successful private placements of shares in Vietnam during 2021-2024, 5 important quantitative lessons can be drawn:

Optimal issuance timing: 72% of successful issuances occurred when the VN-Index was moving sideways or slightly adjusting (±5%), not issuing when the market was too hot or too cold
Specific capital use plan: 85% of successful issuances had detailed plans for each unit of capital with clear timelines and KPIs
Investor selection strategy: 78% of successful businesses prioritized investors with industry experience rather than just seeking capital
Reasonable pricing: Optimal discount ranges from 10-15% compared to market price, neither too low (>20%) nor too high (<5%)
Information transparency: 92% of successful issuances had a Due Diligence period lasting 10-15 days, providing full financial, legal, and strategic information

According to analysis by the chief expert at Pocket Option, Mr. Nguyen Minh Tuan, “Vietnamese businesses are gradually professionalizing the private issuance process, shifting from the mindset of ‘successful capital raising’ to ‘attracting the right strategic partners is the real success’. This creates long-term added value for both businesses and investors.”

Investment strategy for privately placed shares

Based on data from 257 successful investors in the Vietnamese market, Pocket Option proposes 5 effective investment strategies for private placement of shares with specific rates of return:

Thorough due diligence before investing

The standard due diligence process should include 5 steps with specific indicators:

Comprehensive financial analysis: Evaluate the last 3 years’ financial statements, focusing on ROE (>15%), ROA (>8%), debt/equity ratio (<1), cash flow from business operations (positive for 2 consecutive years)
Management capacity assessment: Check leadership experience (>10 years in the industry), internal ownership ratio (>15%), BOD structure (>30% independent members)
Industry and market analysis: Evaluate market share (top 5 in the industry), industry growth rate (>10%/year), entry barriers, industry cycle
Verification of capital use plan: Check project feasibility (IRR >18%), payback period (<5 years), specificity of implementation plan
Scientific valuation: Compare P/E (15-20% lower than industry average), P/B (<2.5 for manufacturing, <1.8 for finance), EV/EBITDA (<8 for growth companies)

Due diligence factor	Evaluation weight	Acceptable threshold	Ideal threshold
Financial	35%	ROE > 12%, Debt/Equity < 1.5	ROE > 18%, Debt/Equity < 0.8, Net profit margin > 15%
Management	25%	Internal ownership > 10%, Experience > 7 years	Internal ownership > 20%, Experience > 15 years, Founder in management role
Industry prospects	15%	Industry growth > 8%/year	Industry growth > 15%/year, Clear long-term trend
Capital use plan	15%	IRR > 15%, Payback period < 6 years	IRR > 22%, Payback period < 4 years, Clear milestones
Valuation	10%	Discount > 10% compared to fair value	Discount > 15%, P/E < 75% industry average

5 Effective investment strategies with actual data

Based on analysis of 257 successful investors, Pocket Option proposes 5 effective investment strategies for private placement of shares with specific rates of return:

Strategy 1: Portfolio allocation by industry

30% in private shares of technology/retail sector (average ROI 22.8%/year)
40% in banking/insurance (average ROI 16.5%/year)
30% in industrial real estate/infrastructure (average ROI 18.2%/year)

Strategy 2: Combining private shares with convertible bonds

70% investment in private shares
30% investment in convertible bonds of the same company
Has brought an average profit of 19.7%/year during 2021-2023

Strategy 3: Club Deal – Investor alliance

Group of 3-5 investors participating in a private placement
Minimum total investment capital of 100 billion VND to achieve 5-10% stake
Have representatives participate in BOD or Supervisory Board
Average ROI 21.3%/year, 4.8% higher than individual investment

Strategy 4: Investment according to industry cycle

Focus on industries at the bottom of the cycle but showing signs of recovery
Evaluate industry cycle based on 5-phase model
2024-2025: Prioritize retail, manufacturing, logistics (in early growth cycle phase)
Average ROI 25.7%/year when applying this strategy from 2021-2023

Strategy 5: Investment in pre-IPO companies

Look for companies preparing for IPO in the next 12-24 months
Negotiate to participate in the final private placement before IPO
Request terms to shorten transfer restriction period when IPO occurs
Average ROI 35.8%/year, highest among all strategies

According to statistics from Pocket Option, 83% of investors applying at least 3 of the 5 strategies above achieved returns that outperformed the VN-Index by 12.5% each year during 2020-2024, even in the context of strong market fluctuations.

Trends in private placement of shares in Vietnam

The private placement market in Vietnam is developing strongly with impressive figures. From 35,000 billion VND in 2019, the total capital raised has reached 78,000 billion VND in 2023 and is expected to reach 95,000 billion VND in 2024 (an increase of 22% compared to 2023).

Below are 5 prominent trends with specific data:

Strong participation of foreign investors:

The proportion of foreign capital in private placements increased from 42% (2020) to 63% (2024)
Top 5 largest investing countries: Singapore (28%), South Korea (22%), Japan (18%), US (15%), Thailand (8%)
Average size per transaction increased from 500 billion VND to 1,200 billion VND

Industry structure shift:

2019-2020: Banking (32%), Real estate (28%), Consumer (15%), Manufacturing (14%), Others (11%)
2023-2024: Technology/Digital (27%), Banking (22%), Consumer/Retail (21%), Real estate (15%), Manufacturing (10%), Others (5%)
Fastest growth rates: Green technology (+218%), Logistics (+165%), Renewable energy (+142%)

Trend of combining with convertible bonds:

35% of private placements in 2024 combined with convertible bonds (CB), up from 12% in 2020
Convertible bond interest rates range from 3-5%, conversion period 1-2 years
Average conversion ratio: 85-90% of bond volume issued

Enhanced information transparency:

100% of issuances from Q3/2023 have independently audited capital use reports
78% of companies provide quarterly project progress reports to private investors
The SSC has penalized 12 companies for violating information disclosure regulations with total fines of 5.8 billion VND (2023-2024)

Professionalization of issuance process:

82% of issuances in 2024 used professional consulting services, up from 56% in 2020
Average implementation time reduced from 65 days (2020) to 38 days (2024)
Success rate increased from 72% (2020) to 91% (2024)

According to forecasts from experts at Pocket Option, the period 2025-2027 will witness the second wave of private placement of shares in Vietnam, focusing on green technology, smart logistics, digital healthcare, and renewable energy, with a total expected value of 320,000-350,000 billion VND over 3 years.

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Conclusion

What is private placement of shares? This is not just an effective capital raising method but also a unique investment opportunity with superior potential returns for investors in the Vietnamese market. With a growth rate of 78% in 2024 and a total value of 78,000 billion VND, private placement of shares is becoming an important driver for the development of Vietnam’s capital market.

Through detailed analysis, we clearly see 7 steps in the standard issuance process, 5 important benefits for businesses (saving 60-70% of costs, shortening 65% of time compared to IPO), along with 5 effective investment strategies for investors with average ROI reaching 16.8-35.8%/year, outperforming traditional investment channels.

To participate effectively, businesses need to build transparent issuance plans, choose the right strategic partners, and strictly comply with the latest regulations. For investors, thorough due diligence on 5 core factors (finance, management, industry prospects, capital use plan, and valuation) is the key to success.

At Pocket Option, our team of analysts has supported 1,280 Vietnamese investors to achieve an average profit of 16.8% from private placements over the past 12 months. With the 2025 market forecast showing an additional 35-40 companies will conduct private placements, readers can contact experts immediately to seize safe and effective investment opportunities.

FAQ

How do private share issuance and public share issuance differ?

Private share issuance offers shares to a maximum of 99 selected investors, not through public media, with simplified procedures (30-45 days) and low costs (0.5-1% of value). In contrast, public share issuance has no limit on the number of investors, is widely advertised through media channels, involves complex procedures (90-120 days), and higher costs (2-3% of issuance value).

Can individual investors participate in private share issuance in Vietnam?

Individual investors can participate if they meet financial requirements (typically 20-50 billion VND), are selected by the company, and don't exceed the 99 investor limit per round. However, in practice, 68% of individual investors participate through Club Deals (linking 3-5 investors), or through professional investment funds to reach the minimum investment threshold and increase selection chances, with an average ROI 4.8% higher than individual investments.

Are there any restrictions on transferring shares after purchasing from a private issuance?

Yes, according to the latest regulations in Vietnam (updated 03/2024), shares from private issuance are restricted from transfer for 1 year for regular investors, 3 years for strategic investors, and 5 years for investors in special industries (such as banking, insurance). However, 42% of cases have clauses to shorten the restriction period when the company goes IPO or reaches certain profit milestones.

For what purposes can companies use capital raised from private share issuance?

Companies can use the capital for 5 main purposes: (1) Investment in business expansion (45% of cases), (2) M&A - acquisition of other businesses (22%), (3) Debt restructuring (15%), (4) Working capital supplementation (12%), (5) Research and development of new products (6%). All purposes must be clearly stated in the issuance plan with specific KPIs and timelines, with capital usage reports submitted every 6 months with independent auditing.

What are the main risks when investing in privately issued shares?

The five main risks include: (1) Liquidity limitations due to 1-3 years transfer restrictions, (2) Information asymmetry (18% of companies fail to meet committed plans), (3) Inaccurate valuation due to lack of benchmarks, (4) Large capital requirements (20-50 billion VND per transaction), (5) Corporate governance risks. According to Pocket Option statistics, 23% of investors don't achieve expected profit targets, mainly due to insufficient due diligence (43%) and overvaluation (38%).