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$185mn raised from PV Oil IPO

Released at: 12:44, 28/01/2018

$185mn raised from PV Oil IPO

photo from hiephoixangdau.org

Demand higher than shares up for sale at January 25 IPO.

by Duy Anh

The government raised VND4.18 trillion ($185 million) from selling 20 per cent of the country’s sole crude oil exporter, the PetroVietnam Oil Corp. (PV Oil), at an initial public offering (IPO), the company announced on January 25.

The proceeds exceeded the government’s target of $122 million from the sale, which is part of plans to equitize hundreds of State-owned enterprises (SOEs) to boost their performance, ease a tight State budget situation, and reform an economy that is highly reliant on foreign investment.

Demand at the January 25 IPO of PV Oil, Vietnam’s second-largest oil products retailer with a 22 per cent market share in the domestic oil products market, was 2.3-times higher than availability, the company said.

A total of 3,195 investors took part, including 54 foreign institutional investors. Overseas investors purchased 6.6 per cent.

Post-IPO, PetroVietnam Board Member Mr. Dinh Van Son said PV Oil would file for a listing on the Unlisted Public Company Market (UPCoM) within the next three months and would work to complete the company’s strategic stake sale. 

A further 44.72 per cent stake will be sold to strategic investors, both domestic and foreign. The government’s ownership is to be reduced to 35.1 per cent after the equitization process is completed.

Eight investors, including a founding shareholder in Vietnam’s private low-cost airline Vietjet Air, have registered to become strategic shareholders of PV Oil, CEO Cao Hoai Duong confirmed on the sidelines of a roadshow on January 12.

The six foreign bidders are Shell, Idemitsu, Puma, Kuwait Petroleum International (KPI), PTT, and SK, while the two Vietnamese contenders are the Sacom Investment Fund and Sovico Holding, he said.

“We have received an application from a foreign investor who expressed a wish to buy 49 per cent of PV Oil shares, the cap set for foreign investors,” he added.

As other foreign investors want to buy between 25 and 35 per cent, the total shares investors have registered to buy exceeds the number to be sold.

Foreign ownership of PV Oil is capped at 49 per cent of charter capital, while foreign investors are also required to deposit an amount equivalent to 20 per cent of the stake they have registered for prior to entering the auction.

Investors seeking to become strategic investors must commit to long-term investment by retaining their holding for at least ten years. They must also commit to prioritizing buying petroleum products from the Dung Quat Oil Refinery and the Nghi Son Refinery and realize commitments in terms of market, technology, and management development.

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