The Binh Son Refining and Petrochemical Company (BSR), the operator of the Dung Quat Oil Refinery in central Quang Ngai province, earned VND5.5 trillion (US$244.5 million) through the sale of nearly 242 million shares during its initial public offering (IPO) held yesterday.

Dung Quat Oil Refinery plays an important role in increasing the added value of every tonne of crude oil in Viet Nam. 

The sale, organised on the HCM Stock Exchange, is Viet Nam’s biggest initial public offering (IPO) this year and part of the Government’s drive to privatise state-owned enterprises to improve their performances

The amount of shares were equivalent to 7.79 per cent of BSR’s charter capital, offered at a starting price of VND14,600 per share.

At this price, BSR is valued at $2 billion, making it the largest firm ever to hold an IPO

The auction attracted 4,079 domestic and foreign investors, including 3,964 individuals and 115 organisations, registering to purchase 652 million shares.

The highest bid price was VND35,000 per share, the lowest was VND14,600 per share - and the average was VND23,043, 21.5 per cent higher than the starting price.

Sixty-two organisations and 561 individuals won the bids.

BSR is a wholly-owned subsidiary of Viet Nam National Oil and Gas Group (PetroVietnam) and operator of the $3 billion Dung Quat Oil Refinery, the first oil refinery in the country. The company’s charter capital is VND31 trillion.

PetroVietnam will retain 43 per cent of BSR’s charter capital, while a maximum of 49 per cent will be sold to strategic investors in three months after the IPO. About 0.21 per cent of shares will be offered to the company’s employees.

Foreign investors may own up to 49 per cent of charter capital.

“The company has recently worked with 17 local and international investment funds and five strategic partners,” Tran Ngoc Nguyen, CEO of BSR, told a roadshow held late last year to introduce investment opportunities.

“They include major investors, such as the Repsol Group from Spain, two major oil and gas corporations from the United States, Macron Petroleum from South Africa, and an investor from Brunei. During the last year, many potential foreign investors have come to explore investment opportunities in BSR.”

The Repsol Group wishes to not only own shares in BSR, but also participate deeply in the management, operations, and crude oil trading of Dung Quat.

According to the company’s financial statement for the end of September, BSR has more than $120 million deposited with OceanBank, which has temporarily ceasing trading. This and other losses are a source of some concern for many investors.

Major oil and gas corporations such as Russia’s Rosneft, South Korea’s SK Group, Thailand’s PTT, and the Kuwait National Oil Corporation have all expressed an interest in buying BSR shares.

The Petrolimex Group also wants to become a strategic partner through share purchases and will prioritise consumption of petroleum products from Dung Quat.

After nearly nine years of operations, since February 2009, the Dung Quat Oil Refinery has produced and sold nearly 50 million tonnes of different products, earning revenue of about $38 billion and contributing nearly $7 billion to the State budget.

BSR accounted for 16 per cent of PetroVietnam’s total revenue and 10 per cent of its State budget contributions last year. It also contributed 33 per cent of its total profit.— VNS