PV Oil issues hard criteria for strategic investors

Significant changes have been announced in the criteria for choosing strategic shareholders

According to the divestment plan submitted to the prime minister’s approval, PV Oil will put 65 per cent stake on sale, including 20 per cent offered at its initial public offering (IPO) and 44.7 per cent offered for strategic investors. The foreign investors are permitted to own a maximum of 49 per cent stake in PV Oil.

However, the criteria to select strategic investors at the divestment plan recently submitted to the PM have numerous changes compared to the one published at the end of 2016. Accordingly, interested investors must have equity of at least VND2 trillion, double than the previous figure.

Besides, interested investors have to agree to consuming products manufactured by Dung Quat and Nghi Son refineries for ten years. The selling price will be based on the petroleum market price.

PV Oil’s equitisation is also a hot topic for both domestic and foreign investors because PV Oil has the second largest market share in Vietnam (22-25 per cent), ranking only behind Vietnam National Petroleum Group (Petrolimex), which holds a 55 per cent market share.

Previously, PV Oil’s general director Cao Hoai Duong admitted that asking the investors to consume products manufactured by Nghi Son refinery is not an attractive point in PV Oil’s equitisation process because the selling price of petroleum products manufactured by Nghi Son is still higher than imported petroleum products, effectively cutting profit for distributors.

Distributors only benefit from selling petroleum products manufactured by Nghi Son refinery in case there is scarcity in imported petroleum sources, however, such a situation is unlikely as the Vietnamese petroleum market was forced open by tariff incentives committed in the country’s free-trade agreements.

Along with changes in criteria to select strategic investors, PV Oil also delayed the IPO to January 2018 instead of the fourth quarter as previously planned.

The divestment plan will be officially approved this month by the PM.

PV Oil currently operates 500 petroleum stations and supplies petroleum for 3,000 other stations, almost all of which are located in the north. PV Oil plans to increase the number of its petroleum stations to 1,500 and increase its market share through M&A activities.

In 2017 PV Oil expected to earn VND48 trillion ($2.1 billion) in revenue and VND650 billion ($28.57 million) in pre-tax profit, signifying increases of 22 and 3.6 per cent on-year, respectively.

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