The closed-end VinaCapital Vietnam Opportunity Fund (VOF) has spent US$45 million to purchase shares of Bình Son Refining and Petrochemical Company (BSR) and PetroVietnam Power Corporation (PV Power) at their initial public offerings (IPO).

The investment fund said, in its latest report published on February 13 before the Tét Lunar New Year holiday, that its winning price for BSR “was a discount of 4 per cent, compared to the average winning price of VND23,000 per share for the equitisation.”

Thus, VOF was able to purchase about 10 per cent of the available shares offered at the BSR IPO on January 17 for nearly $25 million. BSR sold 242 million shares at the IPO, earning some $244.5 million for the State.

Meanwhile, VOF spent $20 million to purchase PV Power shares at the company’s IPO, which was held on January 31. The IPO brought in revenues of some $311 million for the State, after PV Power offloaded its entire 468 million shares.

According to the VOF report, the two sales were quite attractive. “BSR is the only operating oil refinery in Viet Nam, controlling 33 per cent of the market share, with the remaining 67 per cent of refined products imported,” it said.

The report noted, “The refinery business tends to be less affected by oil price volatility than other segments of the oil and gas sector.”

Meanwhile, PV Power remains the second-largest power producer in the country, providing 4.2 gigawatts (GW), or 10 per cent of the country’s electricity. The power company is valued at $1.5 billion.

The PV Power deal was described as “an attractive investment, with an estimated price-to-earnings per share ratio (P/E) of 11.5x, at the starting price of VND14,400,” VOF said.

BSR and PV Power, both subsidiaries of the National Oil and Gas Group (PetroVietnam), are forecast to achieve better business results in 2017, compared to the previous year, according to VOF.

“We had ample cash to invest in all five of the IPOs scheduled for January, and we were very selective and only took part in two: BSR and PV Power. We believe the combination of a reasonable valuation and significant medium-term growth potential of these two companies offer a substantial upside to the starting IPO price.” — VNS