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Petrolimex asks for divestment extension
The Vietnam National Petroleum Group (Petrolimex) has asked the Government to extend its deadline for selling the State’s capital to the 2019-20 period instead of this year as currently planned.
According to Petrolimex, the proposal was made after the company observed several unsuccessful State-divestment deals in 2018, in which few State shares were sold to potential investors or the auctions were postponed due to the small number of registered investors.
The initial public offerings (IPOs) of the Vietnam Rubber Group and Power Generation 3 Corporation (Genco 3) were among the unsuccessful deals. Meanwhile, the deals that collapsed included the State’s divestment from the Vietnam Television Cable Corporation (VTVCab).
The failure of those deals has made the State Capital Investment Corporation (SCIC), which represents the Government in managing the State’s capital in State-owned enterprises, delay other deals planned for 2018, such as Tien Phong Plastic JSC and Domesco Medical Import-Export JSC.
Petrolimex also proposed the Government lift the limit on foreign ownership of its charter capital to 49 per cent from the current 20 per cent so that there will be better odds of selling State shares.
The petrol seller had made the same request in 2017, but Deputy Prime Minister Vuong Dinh Hue asked the firm to keep its foreign ownership limit at 20 per cent of the charter capital at least temporarily.
According to Petrolimex, if the foreign ownership limit stays at 20 per cent, there will only be 9 per cent left for foreign investors – equal to 116 million shares – and that ratio may not be attractive enough to draw foreign capital for the company.
The amount of shares that should be offered for sale to reduce State ownership in Petrolimex to 51 per cent is estimated at 509.2 million shares, Petrolimex said.
The firm is listing more than 1.29 billion shares on the HCM Stock Exchange. Its shares closed Thursday at VND64,600 per share.
At that price level, the potential value of the upcoming Petrolimex deal may reach VND32.89 trillion ($1.46 billion).
The Government is offering foreign investors opportunities to participate directly and indirectly in the petrol and fuel industry to improve the competitiveness and performance of domestic petrol firms.
The Japanese firm Idemistu Q8 is the first foreign-owned petrol retailer in Viet Nam, while foreign investors have purchased stakes in other Vietnamese petrol retailers such as Petrolimex, Comeco and Timexco.
In the past few years, Viet Nam’s equity market capitalisation has remained modest and foreign capital has been key to the development of its economy and securities market.
Net foreign capital was nearly VND47 trillion in 2017. The figure was VND34.5 trillion in the first half of 2018.
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