PVI confident of prospects after PVN divestment

April 25, 2017 | 14:14
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According to the materials for the shareholders’ meeting to be held on April 27, PVI Holdings is going to submit a plan of expanding the foreign ownership limit to 100 per cent for consideration.

Decreasing dependence on PVN

Previously, PVI was a 100 per cent state-owned enterprise with PetroVietnam (PVN) as the representative of the state stake. After implementing the equitisation in 2006 and selling stakes to some foreign investors, PVN’s ownership in PVI has declined to 35 per cent. At present, PVI has two foreign strategic shareholders: HDI Global (belongs to Talanx Group from Germany) holding 35.74 per cent and Oman Investment Fund with 11.58 per cent.

Talanx Group is one of the biggest financial groups in Europe, managing over £100 billion ($108.6 billion) of assets. However, in Vietnam, HDI Global invests in PVI only. A representative of HDI Global said that they pay attention to PVN’s divestment and plan to increase ownership in PVI, but they have to wait for PVN’s final decision.

VIR asked HDI Global, “As a member of PVN, PVI has a lot of advantages arising from an almost monopoly position in the oil and gas insurance field. If PVN divests from PVI, and assuming that HDI Global will purchase these shares and become the biggest shareholder of the company, will HDI Global be concerned over the loss of advantages from PVN?”

U.H. Wollschlager, financial director of HDI Global, answered that previously, when PVN was the controlling shareholder of PVI, PVI benefited a lot from PVN’s network. However, in recent years, PVI’s dependence on PVN has significantly decreased.

“Five years ago, since HDI Global became a strategic shareholder of PVI, its retail business has gradually prospered. In fact, in a developing market like Vietnam, the potential in retail is huge, because many organisations and individuals need insurance for their own assets, like cars, houses, etc. PVI’s business model is similar to that of HDI Global, as in the past, HDI Global focused on business insurance, but now they also have retail insurance products,” Wollschlager said.

Agreeing with Wollschlager, Nguyen Anh Tuan, chairman of PVI, said that currently, revenue from insurance businesses related to PVN accounted for 25 per cent of PVI’s total revenue, while this proportion used to be as much as 85 per cent.

“The development of PVI over the last few years has showed that it is not heavily dependent on PVN. PVI has submitted the divestment plan for PVN, and if PVN sells 35 per cent of the stakes successfully, PVN will earn a huge amount of money,” Tuan said.

“No uneven playing field”

PVN has recently divested from a range of businesses. At the beginning of 2017, PVN’s stake in PetroVietnam Phuoc An Port Investment & Operation Joint Stock Company (PAP) was reduced from 79.58 to 38.89 per cent.

In June 2016, 52 per cent of state-owned capital in PVcomBank, which was held by PVN, was transferred to the State Bank of Vietnam (SBV). Also, PVN planned to divest from the banking industry and a number of other oil and gas enterprises.

PVN’s divestment from PVI has attracted widespread attention from other insurers, especially those interested in wholesale insurance, which is insurance for oil and gas industry in case of PVI. Some insurance companies think that as PVN is a big shareholder of PVI, PVI seems to have the advantage of monopoly on oil and gas insurance. It seems that contractors wishing to join this field are appointed, a position is not up for public tender.

However, PVI’s chairman denied this and said that the oil and gas industry applies public tender fairly.

“A regulation on bidding to provide insurance was issued in 2014 and PVN encourages all foreign and domestic insurers to provide services for the projects or assets managed by PVN. The biggest advantage of PVI is that as a member of PVN, we understand more than anyone all of PVN’s risks, so we have designed the most appropriate insurance programme and ensured risk management at a reasonable cost for PVN. PVI has developed through its own competitive ability, thus, even after PVN’s divestment and the growth of foreign ownership in PVI, we will flourish,” Tuan said.

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By By Kim Lan

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