Kyoei Steel to increase holding in Vietnam Italy Steel

kyoei steel to increase holding in vietnam italy steel
Kyoei Steel to increase holding in Vietnam Italy Steel

Kyoei Steel has released the plan to buy an additional two million VIS shares. The transaction is expected to take place between July 6 and August 5. Once successful, Kyoei Steel will increase its holding in VIS to nearly 50 million shares, equaling 67.7 per cent, from the existing 65 per cent.

Kyoei Steel may spend VND58 billion ($2.52 million) on the deal.

Previously, on May 10, the Japanese steel manufacturer completed the purchase of 33.2 million shares (45 per cent) in VIS to increase its holding to 65 per cent. This stake was divested by hai Hung Trading JSC, which owned 65 per cent in VIS at the time.

At the time, the VIS ticker was valued at VND34,400 ($1.51), thus Kyoei spent VND1.14 trillion ($50.06 million) on the deal.

Increasing its holding in VIS helps Kyoei Steel to increase its steel and steel billets market nationwide, while simultaneously making Kyoei’s market share the second largest, following Hoa Phat Group. Besides, the close relationship between Thai Nguyen Iron and Steel JSC (Tisco), VIS, Thai Hung Trading, and Kyoei is expected to help Kyoei Steel to overcome Hoa Phat in the near future.

At present, Kyoei Steel is considered the most heavyweight competitor of Hoa Phat in the construction steel segment thanks to three factors.

Increasing its holding in VIS helps Kyoei’s market share the second largest, following Hoa Phat Group.

The first is that Kyoei Steel is a controlling shareholder in its member firms in Vietnam—Vina Kyoei Steel, Kyoei Steel Vietnam, and VIS.

The second is that Kyoei Steel has a similar market coverage and market shares as Hoa Phat.

The third is that Kyoei Steel’s factories are equipped with advanced technology, producing higher efficiency and lower costs than the steel mills using Chinese technology.

In September 2011 Kyoei Steel established Kyoei Steel Vietnam Co., Ltd. (KSVC) in the northern province of Ninh Binh. KSVC started operating in March 2012 with the designed production capacity of 500,000 tonnes per year. At present, Kyoei holds 60 per cent in KSVC, Metal One Corporation has 20 per cent, and Marubeni-Itochu Steel Inc. 40 per cent. Previously, in 1994, Kyoei Steel, Mitsui & Co., and Marubeni-Itochu Steel Inc. from Japan, along with Vietnam Steel Corporation, established the Vina Kyoei Steel Co., Ltd. joint venture. It set up a steel plant in the southern province of Ba Ria-Vung Tau with the annual capacity of 450,000 tonnes in 1996. In July 2015, Vina Kyoei Steel Ltd. put into operation its second, $220-million steel plant after three years of construction.