IPO of heavyweight power producers electrifies market

In addition to PV Power, Genco 3 is also planning its IPO

Deputy Prime Minister Vuong Dinh Hue has approved Genco 3’s equitisation plan. Genco 3 currently has charter capital of VND20.81 trillion ($916.4 million), with 51 per cent or 1.06 billion shares held by EVN.

According to the approved equitisation plan, EVN will put 267 million shares, or 12.8 per cent of its charter capital, on sale at its IPO at the initial price of VND24,600 ($1.08) apiece. EVN expects to acquire VND6.59 trillion ($290.1 million) in proceeds.

After completing the IPO, EVN will offer 749.1 million shares, equalling 36 per cent of its charter capital, to strategic investors. Interested firms and individuals will have to show proof of solid financial potential and management capacity as well as good relations with large-scale foreign firms. Besides, they have to affirm to accompany with Genco 3 for a long time and support the company to develop after the equitisation.

According to the plan, EVN will hold 51 per cent of Genco 3 until the end of 2019. From 2020 onwards, EVN will consider decreasing its holdings in Genco 3 below 50 per cent.

Previously, PV Power also published its equitisation plan. Notably, PV Power will put more than 468.3 million shares, or 20 per cent of its charter capital, up for sale at its IPO on January 31, 2018 with the initial price of VND14,400 ($0.64) apiece.

The shares will be listed on the Hanoi Stock Exchange (HNX) and PV Power expects to earn at least VND6.74 trillion ($296.79) from the IPO, according to HNX.

The market capitalisation of PV Power at the share price of VND14,400 ($0.64) is estimated at $1.48 billion, while its charter capital is projected to reach VND23.4 trillion ($1.04 billion) after the equitisation process is completed.

PV Power will also sell 676 million shares, or 29 per cent of its charter capital, to strategic investors. Strategic investors are required to have reported profit in the last two years, hold no accumulated losses, and keep the acquired PV Power shares for at least five years.

After PV Power completes its equitisation, Vietnam National Oil and Gas Group (PetroVietnam) will hold 51 per cent of chartered capital of the firm. The state ownership in PV Power may reduce after 2019, depending on the outcomes of restructuring the company’s loans and completing negotiations with debt holders.

Both Genco 3 and PV Power are considered attractive by investors due to their growth potential.

Genco 3 is known for operating with massive profit. It operates in three major sectors, namely investment-construction, electricity generation, as well as trade and maintenance services. Genco 3 operates thermal power plants with a total capacity of 6,304 megawatts, equivalent to 16 per cent of the whole country’s output. The Phu My thermal power plant alone has a capacity of up to 2,540MW.

PV Power was established in 2007 by PetroVietnam. The company operates a coal-fired thermal power plant, three gas-fired thermal power plants, and three hydropower plants. The company’s annual generation capacity is more than 4,208MW, or 10 per cent of the country’s total power output.

PV Power is forecast to record VND31.5 trillion ($1.39 billion) in net revenue for 2017, a yearly increase of 12 per cent, according to Ho Chi Minh City Securities Corporation (HSC). The company’s after-tax profit is projected to increase by 25 per cent year-on-year to VND1.9 trillion ($83.66 million).

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