The Vietnamese government raised VND5.57 trillion (US$245 million) in proceeds by selling 241.55 million shares, equivalent to a 7.79% stake in BSR, at the company’s Initial Price Offering (IPO) at the Ho Chi Minh City Exchange (HOSE) on January 17, the firm stated on its website.
Dung Quat Oil Refinery.
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A record number of 4,079 investors, including 74 foreigners, attended the IPO, registering to buy 2.7 times the share volume on offer (exceeding the supply by 651 million shares). Foreign investors have successfully purchased 147.83 million shares, equivalent to 61.2% of the total offer.
BSR is operating Vietnam’s first oil refinery, Dung Quat Refinery, with the current capacity of 6.5 million tonnes of crude oil per year, meeting 30% of the domestic demand for petroleum products. The plant’s capacity is expected to be expanded to 8.5 million tonnes by 2021.
In 2017, BSR’s consumption output reached 6.1 million tonnes, resulting in a revenue of VND80.5 trillion (US$3.5 billion). The Vietnamese oil refinery operator has contributed VND10.3 trillion (US$453 million) to the state budget, recording after-tax profit of VND8 trillion (US$352 million).
That said, BSR accounted for 16% of the total revenue of its parent company Vietnam National Oil and Gas Group (PVN), for 33% in its profit, and 10% in its contribution to the state budget.
Under the equitization plan, PVN currently holds 1.3 billion shares, or 43% of BSR’s charter capital. In addition to the 241.55 million shares recently sold in the IPO, 6.5 million preferential shares (0.21% of charter capital) were sold to BSR employees, while the remaining 1.5 billion shares, or 49% of BSR’s charter capital, will be sold to strategic investors through private placement.
The maximum foreign ownership at BSR is 49%.
The government also plans to organize the IPO of PVN’s two other subsidiaries, PetroVietnam Oil Corporation (PVOil) and PetroVietnam Power (PVPower), later this month.
The stake sale is part of Vietnam’s effort to divest state capital from hundreds of state-owned enterprises (SOEs), ease the public debt burden, and reform the economy that is highly reliant on foreign investment.
PVN is currently in the focus of the highest profile corruption crackdown of the recent years that initiated court proceedings against 22 defendants (all of whom were current and former senior officials at PVN), resulting in a court hearing on January 11 in Hanoi. The defendants, including Dinh La Thang, a former Politburo member and Chairman of PVN, are facing severe punishment for violating State regulations on economic management causing serious consequences.
