The board of Vietnam Enterprise Investments Limited [LON:VEIL] has moved to placate restless shareholders with a tender offer for up to 10 per cent of the company’s issued share capital, alongside plans for up to two further tenders over the next year.
The proposals, set out in a circular published this week, mark the latest attempt by the closed-end fund to address a persistent discount to net asset value and to offer investors a partial exit at close to NAV.
Shareholders will be asked to approve the initial tender at a general meeting on 8 January 2026. If sanctioned, the company will repurchase up to a tenth of its shares at a price set at a 3 per cent discount to adjusted NAV. The board has also signalled its intention, though not a commitment, to conduct two additional tenders of up to 10 per cent each within the following 12 months, subject to market conditions and further shareholder approvals.
Warning shot to VEIL’s board
The move follows a warning shot fired at the company’s annual meeting in June, when more than a fifth of votes were cast in favour of a discontinuation resolution that would have wound up the trust at the end of 2027. Although the motion was defeated, it exceeded the 20 per cent threshold that, under industry rules, obliges boards to consult shareholders and report back.
Those consultations, covering investors representing around 60 per cent of the issued share capital, revealed a familiar set of frustrations. While most shareholders reiterated their support for the Vietnam investment case, a minority expressed a desire to reduce or exit their holdings.
- Investing in Vietnam: Is FTSE Russell upgrade a buy signal?
- What does Vietnam’s FTSE Russell promotion mean for investors?
The sticking point, according to the board, was the discount at which the shares trade, which constrains liquidity in the secondary market. Some investors also sought the option to switch into an open-ended fund run by the same manager or to receive assets directly through an in-specie distribution.
The tender offer has been designed to accommodate those demands while limiting disruption to the underlying portfolio, which is invested in what the board describes as a relatively illiquid market. Eligible shareholders will be able to elect to receive cash, and certain qualifying investors may opt instead for shares in an open-ended vehicle or a pro rata slice of the portfolio. By capping each tender at 10 per cent, the board argues, VEIL can manage liquidity more effectively than through a single, larger return of capital.
Pricing the tender at a modest discount to adjusted NAV shifts the costs of the exercise to those who choose to participate, while leaving continuing shareholders marginally better off. The company says this strikes a balance between offering an exit and protecting long-term investors.
VEIL’s assertive capital management programme
The proposals build on an already assertive capital-management programme. VEIL repurchased 16.3m shares in 2024 and a further 23.7m in 2025 to date, equivalent to 12.8 per cent of the share count at the start of the year.
According to Kepler Partners, the average buyback price in 2025 was at a 14 per cent discount to NAV, compared with 19 per cent last year, reflecting a narrowing gap. With the discount around 13 per cent at the time of the tender announcement, Kepler estimates that participating shareholders could crystallise an 11 per cent uplift, assuming a stable NAV.
The board has been careful to temper expectations. Any subsequent tenders will be entirely discretionary, with terms to be set out in separate circulars, and there is no guarantee that they will proceed. Directors, who collectively own 253,423 shares, intend to vote in favour of the resolution but will not tender their own holdings.
Strategically, the board insists that nothing has changed in its conviction about Vietnam. The country has delivered average real GDP growth of 6 per cent a year since 2015, underpinned by a growing middle class, export expansion and a gradual shift towards private enterprise. The closed-end structure, it argues, remains well suited to capturing those long-term opportunities without being forced sellers in volatile markets.
For investors, the choice is finely balanced. The tender offers provide a rare chance to exit close to NAV, but they also come as Vietnam shows signs of renewed momentum after a difficult period. By tackling the discount head-on, VEIL’s board may have strengthened the case not only for staying put, but also for fresh capital to take a look.
Comments (0)