(Bloomberg) -- VietJet Aviation Joint Stock Co., which controls almost half of Vietnam’s domestic airline market after first taking flight six years ago, received shareholder approval to increase foreign ownership to meet investor demand in the nation’s soaring travel industry.
Shareholders meeting in Ho Chi Minh City agreed to raise the cap on foreign ownership to 49 percent from 30 percent as the budget carrier forecasts 2017 profit to rise 36 percent from $110 million (2.5 trillion dong) in 2016, the company said. Carrier’s higher foreign ownership now needs the approval of Prime Minister Nguyen Xuan Phuc because aviation is considered a restricted industry with a 30 percent foreign ownership cap.
VietJet has 136 foreign investors who own 26 percent of the company, Chief Executive Officer Nguyen Thi Phuong Thao said in an interview. Raising the foreign investor limit is not aimed at attracting a strategic investor, though the company is be open to one, she said.
“I just want to create more investment opportunities to those who want to invest in VietJet and create better liquidity in the market,” she said.
Shares of VietJet have surged 56 percent since its trading debut on Feb. 28. The stock rose 0.2 percent to 131,600 dong at the close in Ho Chi Minh City on Thursday. Shares dropped 1.1 percent at the midday break. The benchmark VN Index was down 0.6 percent.
“Vietnam’s aviation industry is very attractive to investors,” said Tran Thi Hai Yen, a Ho Chi Minh City-based analyst at ACB Securities JSC. “There are more and more foreign investors interested in this company now.”
VietJet began its service in late 2011 after being founded by billionaire Nguyen Thi Phuong Thao in 2007. The carrier competes with national carrier Vietnam Airlines, which owns 70 percent of budget carrier Jetstar Pacific Airlines Aviation JSC, with Qantas Airways Ltd. holding the remaining 30 percent. Vietnam Airlines also owns Vietnam Air Services Co., known as Vasco.
VietJet has a 42 percent share of the domestic aviation market, the same as Vietnam Airlines, said Brendan Sobie, Singapore-based chief analyst at CAPA Centre for Aviation. The rest of the market is controlled by Vietnam Air’s subsidiaries. VietJet could achieve 50 percent domestic market share within three years, Sobie added.