PetroVietnam Oil Corp. (PV Oil), Vietnam’s sole crude oil exporter, is in talks to sell a holding of as much as 40 per cent to strategic investors and expects to narrow down its list to about five potential bidders for the government this month.

It expects to raise at least $270 million from the sale to one or two investors, President and CEO Mr. Cao Hoai Duong was reported by Bloomberg as saying. 

Some ten potential strategic investors, including “major oil companies” from Japan, South Korea, Thailand, the Middle East, and Vietnam have applied to buy the shares, according to Mr. Duong.

PV Oil will also offer as much as 15 per cent of its shares in an initial public offering (IPO) in the first half this year, the CEO said, adding that the stake sale to strategic investors will occur at the same time or after the IPO. 

The company will list shares at an undetermined time on the Ho Chi Minh City Stock Exchange (HoSE) after the IPO, he said.

“We are looking for good strategic partners so we can have other successful M&As,” Mr. Duong was quoted as saying, referring to past acquisitions to expand its retail network. 

The sale of shares will inject private investment in the State-controlled petroleum industry and accelerate government plans to open up the oil and gas sector, a market that’s worth $5.9 billion, according to Ms. Truong My, the Hanoi-based research manager at the Ho Chi Minh City Securities Corp. (HSC).

“PV Oil’s IPO is considered the most attractive in 2017,” Ms. Truong said. “Almost all financial investors, both institutional and individual, are looking forward to having a piece of the cake.”

The country’s second-largest petroleum retailer, PV Oil is also seeking to expand its market share of 22 per cent and bridge the gap with the Vietnam National Petroleum Corp. (Petrolimex), which holds about half, according to Saigon Securities Inc. (SSI).

On a related note, Petrolimex has also been reported to be listing its shares on HoSE around April 10-12. 

The country’s leading oil products distributor has a valuation of around $2.3 billion, which would rank it among the Top 10 listed firms.

PV Oil, which derives 75 per cent of its revenue from oil distribution, is aiming to triple its nationwide gas station network to 1,550 outlets through 2022, Mr. Duong said.

It still has potential to grow, he went on, referring to the government’s market share cap of 50 per cent for petroleum distributors. 

“We are big enough to buy smaller competitors to expand our market share,” he explained.

The company is planning $280 million in acquisitions over the next five years, with about $170 million to come from its cash holdings and the remainder from bank borrowings. Its retail network has expanded rapidly thanks to a variety of M&As with local enterprises.

Last year it earned VND34 trillion ($1.5 billion) in revenue and VND530 billion ($23.2 million) in gross profit.

Its parent company, PetroVietnam, has planned to reduce its holdings in PV Oil to less than 50 per cent by 2020, Mr. Phan Dang Tuan, Head of the Ministry of Industry and Trade’s Steering Committee for Enterprise Reform and Development, was quoted as saying on the Oil Gas Vietnam Forum’s website.

VN Economic Times