Vietnam's Only Crude Exporter Attracts Oil Majors for Stake Sale

Updated on
  • PV Oil to shortlist number of potential bidders this month
  • PV Oil aims to triple number of gas stations over five years

PetroVietnam Oil Corp., Vietnam’s sole crude exporter, said it’s in talks to sell as much as 40 percent to strategic investors and expects to narrow down to a list of about five potential bidders for the government this month.

PV Oil, as it’s commonly known, expects to raise at least $270 million from one or two investors from the stake sale, President and Chief Executive Officer Cao Hoai Duong said at the company’s Ho Chi Minh City headquarters. About 10 potential strategic investors, including “major oil companies” from Japan, South Korea, Thailand, Vietnam and the Middle East, have applied to buy the shares, he said.

PV Oil will also offer as much as 15 percent of its shares in an initial public offering in the first half this year, the CEO said, adding that the stake sale to strategic investors will occur simultaneously with or after the IPO. The company will list shares at an undetermined time on the Ho Chi Minh City Stock Exchange after the IPO, he said.

"We are looking for good strategic partners so we can make another M&A success," Duong said in an interview on Tuesday, referring to past acquisitions to expand its retail network.  

‘Most Attractive’

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 My Truong, Hanoi-based research manager at Ho Chi Minh City Securities Corp.

“PV Oil’s IPO is considered the most attractive one in 2017,” My said. “Almost all financial investors, both institutions and individuals, are looking forward to have a piece of the cake.”

PV Oil, which is the country’s second-largest petroleum retailer, is also seeking to expand its market share of 22 percent, trailing behind larger competitor Vietnam National Petroleum Corp. or Petrolimex, which has about half, according to Saigon Securities Inc. estimates.

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

“We still have big room ahead to grow,” Duong said in the interview on Tuesday, referring to the government’s market share cap of 50 percent for petroleum distributors. “We are big enough to buy smaller competitors to expand market share.”

The company is planning $280 million in acquisitions in the next five years, he said. About $170 million will come from its cash holdings, with the rest from bank borrowings, he said.