PetroVietnam plans to reduce its ownership of PetroVietnam Gas Joint Stock Company from the current 97 percent to 65 percent. (Photo: PetroVietnam)Hanoi (VNA) – The Vietnam Oil andGas Group (PetroVietnam) plans to reduce its ownership of PetroVietnam GasJoint Stock Company (PV Gas) from the current 97 percent to 65 percent.
The divestment, scheduled for 2018-2020, follows the Government's instructions for the company to pare its stakes in three State-ownedcompanies to a minimum of 51 percent by 2020, the other two being Petro VietnamFertiliser and Chemicals Corporation (DPM) and PetroVietnam Ca Mau FertiliserJoint Stock Company (DCM).
The PV Gas divestment is expected to attractmany large investors who would be eager to buy into a company that reportedlycontribute 30 percent of PetroVietnam’s profits.
PetroVietnam, established in 1977, through itsvarious companies including wholly-owned subsidiaries, now covers the entiregamut from oil and gas exploration and production to storage, processing,transportation, distribution, and services.
At an interaction with the media in late January, PV Gas chairman Le Nhu Linh said the divestment would be done very carefully toidentify appropriate strategic shareholders.
A detailed plan would be submitted to PetroVietnamand then to the Government for approval, he said.
He expected the stake sale to not only be hugelyprofitable for the Government but also secure access to advanced technologiesand modern management from strategic investors from the west, Japan and theRepublic of Korea.
By 2019, PetroVietnam will also have to entirelydivest its stake in PVI Holdings, Phuoc An Port Investment and Exploitation Oiland Gas JSC, Green Indochina Development JSC, SSG Real Estate JSC, PetroVietnamTrade Union Finance JSC, PetroVietnam Construction joint Stock Corporation, andPetroVietnam Maintenance and Repair JSC.
In the first quarter of this year PetroVietnamsuccessfully equitised three of its companies, PetroVietnam Oil Corporation (PVOil), Binh Son Refining and Petrochemical Co Ltd (BSR) and PetroVietnam PowerCorporation (PV Power), reducing its ownership to below 50 percent.
The three companies made successful initialpublic offerings.
In fact, the BSR IPO netted the Government 60 percentmore money than it had expected.
BSR had expected to sell 241.6 million shares,or 7.79 percent of its chartered capital, to the public at 14,600 VND per share(0.64 USD).
At this price, BSR would have been valued atalmost 2 billion USD, making it the largest firm ever to hold an IPO.
A maximum of 49 percent is expected to be soldto strategic investors three months after the IPO, with PetroVietnam retaining43 percent. Some 0.21 percent of the shares will be offered to the company’semployees.
But to return to the IPO, the Government earned 5.5trillion VND (244.5 million USD) through the sale. The highest bid was 35,000 VNDper share, the lowest was 14,600 VND per share and the average was 23,043 VND,56 percent higher than the reserve price.
The auction saw 3,964 individuals and 115organisations register to buy 652 million shares.
The Government raised 6.99 trillion VND (307.8million USD) from selling 468.37 million shares of PV Power, or 20 percent ofits chartered capital through an IPO on January 31.
The average price was 14,938 VND, with thehighest and lowest successful bids being 28,000 VND (1.23 USD) and 14,500 VND (0.64USD).
The company is now valued at 1.48 billion USD.
PV Power’s success came as no surprise becauseit has been reporting profitable operations year after year, and the offerprice was thought to be attractive.
Established in 2007, the company operates onecoal-fired thermal power plant, three gas-powered plants and three hydropowerplants. Its annual output is more than 4,208 MW, or 10 percent of the country’sentire capacity.
Last year it reported net revenues of 31.5trillion VND, an increase of 12 percent, and post-tax profit of 1.9 trillionVND, a 25 percent increase.
In PV Oil’s IPO on January 25 all 207 millionshares, or 20 percent of its chartered capital, were snapped up for a total of 190million USD. The average successful bid was 20,196 VND (0.89 USD) pershare. The lowest was 19,200 VND, 5,800 VND higher than the reserve price.
Foreign investors only bought 68.47 millionshares.
The Government has instructed PetroVietnam toretain its current ownership in some other subsidiaries and associate companiessuch as PetroVietnam Technical Services Corporation, the Vietnam Russia JointVenture Vietsopetro and PetroVietnam Drilling and Well Services Corporation.
PetroVietnam owns respectively 51.4 percent, 51 percentand 50.4 percent stakes in them.
But despite all this, analysts said the PetroVietnam’sdivestment and equitisation remain lower than expected due to several factors.
For one, its subsidiaries are too large forstrategic shareholders.
For another, foreign investors expect transparent financial reports, which islacking at many Vietnamese firms including oil companies.
Thus, for many, valuation is a difficult andslow process.
Oil companies have difficulty identifying theideal management model after their IPO.-VNA
VNA
