PV Oil collects $190 million from IPO

PV Oil's IPO has been a success, now it is time to find strategic investors

The Ho Chi Minh City Stock Exchange has published the results of PV Oil’s auction. Accordingly, 1,378 investors, including 45 organisations and 1,333 individuals went home with shares in their pockets. Foreign investors only bought 68.47 million shares, equalling 33 per cent of offered shares.

The lowest selling price was VND19,200 ($0.85), VND5,800 higher than the offered price.

PV Oil’s IPO went beyond expectations as six months ago, company leaders stated that reaching the selling price of VND15,000 ($0.66) would already be satisfactory. Meanwhile, Viet Capital Securities expected the selling price to be VND18,000 ($0.79).

Domestic investors were more interested in the IPO, however, foreign investors were more excited about becoming strategic investors. Notably, six overseas investors are vying for majority stakes at PV Oil, competing against two domestic bidders.

Potential foreign partners include major oil corporations from around the world: Royal Dutch Shell (UK/Netherlands), Kuma (Switzerland), SK (South Korea), Idemitsu Kosan (Japan), Kuwait Petroleum International, and an undisclosed firm from the Middle East. The two Vietnamese investors in the race are SAM Holdings and Saigon General Service Corporation (Savico).

There are some interesting things to note about PV Oil’s suitors. Firstly, Idemitsu Kosan and Kuwait Petroleum International are not newcomers to the Vietnamese market. The two firms are investing in the $9.2 billion Nghi Son Refinery in the central province of Thanh Hoa, Vietnam’s second oil refinery.

PV Oil is currently a major customer of Nghi Son Refinery, having signed agreements to buy products from the latter. With a significant PV Oil stake, Idemitsu Kosan and Kuwait Petroleum International would be likely to secure the output for the refinery, which is soon to come on stream.

Idemitsu Kosan recently launched the first foreign-owned petrol retailer in Vietnam, Idemitsu Q8.

This means that if the two partners manage to win the bid at PV Oil, they will also expand their market share in an instant—at present, PV Oil holds 25 per cent of the petrol retail market share in Vietnam.

However, these two bidders will have to face strong competition from Royal Dutch Shell. The Dutch-British oil giant is a long-standing player in the Vietnamese market for 17 years. Last November, executives from the group met with officials of the Ministry of Industry and Trade and expressed their intention to partner with Vietnamese firms for oil and gas manufacturing.

The criteria to select strategic investors have numerous changes compared to the ones published at the end of 2016. Accordingly, interested investors must have equity of at least VND2 trillion ($88.07 million), double than the previous figure.

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

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