Dung Quat IPO expected to bring in $176 million

December 22, 2017 | 14:55

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On January 17 of next year, Binh Son Refining and Petrochemical Co., Ltd. (BSR), the operator of Dung Quat Refinery, will conduct its initial public offering (IPO) to sell 242 million shares, equalling 7.79 per cent of its charter capital at the initial price of VND14,600 ($0.64) apiece, with the expectation to acquire VND4 trillion ($176.1 million) from the deal.

BSR will hold its IPO next January

This was published at the BRS road show to introduce investment opportunities to investors, attracting the participation of more than 200 investors in Ho Chi Minh City on December 20.

According to Tran Ngoc Nguyen, on December 8, Prime Minister Nguyen Xuan Phuc approved BSR’s equitisation plan. Accordingly, the company currently has a charter capital of VND31 trillion ($1.36 billion).

After the IPO, Vietnam's oil and gas group PetroVietnam will retain 43 per cent of BSR’s charter capital, while a maximum of 49 per cent will be sold to strategic investors within three months after the IPO. About 0.21 per cent of the shares will be offered to the company’s employees.

Nguyen added that to date, BSR received applications and joined face-to-face meetings with 17 investment funds and five partners interested in becoming the strategic investor, including Repsol Energy Group, PEtroleumBrunei, Pertamina, SRC, Rosneft, SK, PTT, and Kuwait National Petroleum Company. Especially, World Petro from the US and MacronPetro Petroleum from Africa are eager to buy the whole share volume on offer.

Besides, Repsol Energy Group from Spain wants to hold stakes in BRS and join the Board of Directors of Dung Quat Refinery.

Regarding domestic investors, state-run Vietnam National Petroleum Group (Petrolimex) plans to buy a large stake volume to become a strategic partner of the refinery. In August, representatives of Petrolimex and BSR signed a co-operation agreement.

According to the deal, Petrolimex will buy BSR’s shares after it conducts the equitisation and completes its IPO. Besides, Petrolimex confirmed giving top priority to selling the petrol, LPG, and other petrochemical products of Dung Quat Refinery. Petrolimex plans to put up 20 per cent of its stakes for sale to mobilise capital for the BSR acquisition.

The BSR IPO was priced based on the asset approach (total assets over book value) but its price may reach about VND57,000 ($2.51) a share based on the Price/Earnings ratio.

In the 11 months of this year, BSR manufactured 5.57 million tonnes of petroleum, meeting 30 per cent of the domestic demand.

Dung Quat Refinery’s operator reported total revenues of VND71.9 trillion ($3.15 billion) in the first 11 months of this year, up 15.8 per cent over the annual plan. It contributed VND9.06 trillion to the state budget, 26.3 per cent higher than planned for the entire year.

BSR's profit is expected to top VND8 trillion ($351 million) by the end of the year, with a return on equity (ROE) ratio reaching 25-26 per cent.

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