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Vietjet co-founder in race for PV Oil strategic stake

Released at: 14:33, 15/01/2018

Vietjet co-founder in race for PV Oil strategic stake

Mr. Cao Hoai Duong, CEO of PV Oil (Photo: Quang Huy)

Sovico Holding among those registering to pick up shares at January 25 auction.

by Quang Huy

Eight investors, including a founding shareholder of Vietnam’s private low-cost airline Vietjet Air, have registered to become strategic shareholders of the Vietnam Oil Corporation (PV Oil), PV Oil CEO Cao Hoai Duong confirmed on the sidelines of its 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 Savico Holding, Mr. Duong said.

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

As other foreign investors want to buy a stake between 25 and 35 per cent, the total shares investors have registered to buy exceed the number to be sold, the CEO added.

PV Oil, a subsidiary of the Vietnam National Oil and Gas Group (PetroVietnam) and the country’s sole crude oil exporter, plans to offer 20 per cent of its shares at an initial public offering (IPO) on January 25 on the Ho Chi Minh Stock Exchange at an initial price of VND13,400 ($0.6) per share.

With nearly 207 million shares on offer, the company hopes to raise at least $122 million.

PV Oil would also offer up to an additional 44.72 per cent, or 462 million shares, to strategic investors and another 0.18 per cent to employees. The government’s ownership is expected to be reduced to 35.1 per cent after the equitization is completed.

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

Investors seeking to become strategic investors at PV Oil must commit to long-term investment by retaining their holding for at least ten years.

Strategic investors must commit to prioritizing buying petroleum products from Dung Quat Oil Refinery and realize commitments in terms of market, technology, and management development.

Every potential strategic investor must submit to PV Oil a proposal to develop the company if it becomes a strategic investor, Mr. Duong said.

PV Oil expects that foreign oil and gas corporations will help develop businesses in the non-petroleum sector, such as convenience stores, fast food outlets, car wash services, and garages, along with the network of 540 PV Oil petrol stations.

The company plans to float shares on a local stock exchange one year after its equitization. In Vietnam, the initial public offering (IPO) and the listing are two separate processes.

With some 52 per cent held by Ms. Nguyen Thi Phuong Thao, the CEO of Vietjet Air, Sovico Holding, which is known for investing in a wide range of businesses, including real estate and aviation, increased its registered capital by 50 per cent late last year to VND3 trillion ($132.16 million).

Sovico’s keenness to join the fuel distribution industry comes as no surprise, as Vietjet Air has been growing rapidly and is poised to surpass national flag carrier Vietnam Airlines in leading in the domestic aviation market.

According to the Center for Asia Pacific Aviation (CAPA), Vietnam’s domestic market was one of the fastest-growing in the world from 2012 to 2016. Growth slowed in 2017 but is expected to continue at a double-digit rate per annum over the next few years.

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