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ACV still negotiating with ADP over 20% stake sale

Released at: 08:00, 16/03/2017

ACV still negotiating with ADP over 20% stake sale

Photo: Duc Anh

Deal some way off as sticking points emerge over details of sale.

by Duy Anh

A representative from Airports Corporation of Vietnam (ACV) confirmed with VET that the sale of 20 per cent to Aeroports de Paris (ADP) is still under negotiation.

Last week, after a lengthy courtship, the Vietnamese Government was reported to have given approval to the French airport authority acquiring 20 per cent of ACV and becoming its strategic partner.

The representative confirmed, however, that the government gave permission to ADP to negotiate and only when negotiations are completed will the 20 per cent sale be conducted.

According to a knowledgeable source, considerable disagreements remain between ACV and ADP that need to be addressed by the government. First, the French partner wants to establish the principle of “One Airport - One Operator” at all 22 airports currently managed by ACV, through a special decree or circular issued by the Ministry of Transport (MoT) before completing the acquisition.

This is believed to be the most important issue for ADP. ACV is to be the only operator even when airports are expanded or upgraded. There will be no exception for Tan Son Nhat International Airport in Ho Chi Minh City, where domestic investors are lining up with investment proposals for terminals T3 and T4.

ACV said that ADP’s proposal is different from the previous agreement signed at the beginning of January and a decision is outside of its authority.

Another issue also beyond ACV’s authority is that ADP wants to have assurances that ACV will benefit from the under-construction Long Thanh International Airport in southern Dong Nai province, which will serve Ho Chi Minh City. In ADP’s opinion, if Long Thanh is put into operation, part of the revenue of Tan Son Nhat International Airport, which is currently the biggest money-maker for ACV, will be reallocated. The operations of Long Thanh may influence ACV’s activities, which will have a negative effect on ADP’s investment.

There is also disagreement over the price of the shares to be sold to ADP. The French partner wants the price to be negotiated based on various pricing methods, with expectations suitable to its business and strategies. Meanwhile, ACV wants to set the price based on the price of its shares on the Unlisted Public Company Market (UPCoM), where its 2.1 billion shares were listed in November last year after an initial public offering (IPO) in 2015.

ACV shares have been trading at around VND50,000 ($2.2), double the price at listing, making its market value VND110 trillion ($4.8 billion). Hungry for capital, ACV plans to list over 2.1 billion shares on the Ho Chi Minh City Stock Exchange by the end of this year. Its charter capital is currently VND21.7 trillion ($951 million).

Prime Minister Nguyen Xuan Phuc met last week in Hanoi with Mr. Augustin de Romanet de Beaune, ADP’s Chairman and CEO, where he promised favorable conditions for ADP’s operations in Vietnam.

Based in Ho Chi Minh City, ACV must raise funds to upgrade Vietnam’s airport infrastructure. The centerpiece development is Long Thanh International Airport, 40km east of the city. The airport will ease congestion at Tan Son Nhat in the coming decade, at a cost of $16 billion.

ADP expressed an early interest in investing in Long Thanh, and two years ago said it could bring $2 billion to the table. It was the first investor to contact ACV as a possible strategic partner, two days after the government approved the equitization plan. In 2015 it offered to buy up to 30 per cent of ACV ahead of the IPO.

ACV initially planned to sell no more than 10 per cent to a strategic partner, but that cap has been raised to 20 per cent and will reduce State ownership to 75 per cent from 95.4 per cent. Last year, ACV handled nearly 81 million passengers at its 22 airports, an increase of 28 per cent against 2015. It also handled over 1 million tons of cargo, up 12 per cent.

ADP wants to secure a footing in one of the world’s fastest-growing aviation markets, which has hitherto been serviced under a State monopoly. The French company beat out Singapore’s Changi Airport Group and the Bank for Investment and Development of Vietnam. Foreign investors, including VinaCapital, currently hold less than 3 per cent of ACV.

ACV posted a net profit of VND2 trillion ($87 million) on revenue of VND14.5 trillion ($635 million) in 2016. It aims to increase revenue by 8 per cent and pre-tax profit by 3 per cent every year during the 2017-2020 period. 

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