Vietnam: PV Power mulls stake sale of up to $700m to foreign investors

Vietnam: PV Power mulls stake sale of up to $700m to foreign investors

PV Power, the power generation arm of Vietnam's state-owned energy giant
PetroVietnam, is said to be mulling a stake sale to foreign investors, after
its intended IPO failed to materialise in 2016.

In June 2016, the company had announced that it would dilute a 25 per cent
stake (from the state ownership) in an October (2016) IPO. The first
shareholder meeting was accordingly slated for December.

However, since then the PetroVietnam's wholly-owned subsidiary has been
silent on its IPO plan, which incidentally, had already received a nod from
local government (in 2015).

In a latest development, the Vietnamese government has declared its
intention to reduce its holding in over 100 state firms - to less than 50
per cent- by 2020 without. No other detailed timeline was provided for this.

The top 10 corporations and conglomerates in this list include PV Power and
PV Oil - another energy major under the umbrella of Vietnam's biggest
enterprise, construction group Song Da, telecom and broadcasting firm VTC,
Vietnam Cement Industry Corporation and Ben Thanh Group.

By the end of 2015, the state holdings in some 800 companies was worth $55
billion. These businesses constituted a total asset value of $130 billion,
according to the World Bank's Vietnam Development Partnership Forum.

The privatisation scheme (by 2020) is therefore expected to reap tens of
billions of dollar for the government.

In addition, the state will also hold minority stakes at Binh Son Refinery
and Petrochemical - the operator of the country's first oil refinery, and
Dung Quat Shipbuilding Industry, while remaining 100 per cent ownership at
their parent firm PetroVietnam.

By the end of 2015, the state holdings in some 800 companies was worth $55
billion. These businesses constituted a total asset value of $130 billion,
according to the World Bank's Vietnam Development Partnership Forum. The
privatisation scheme by 2020 is therefore expected to reap tens of billions
of dollar for the government.

Particularly for the potential stake offer by PV Power, deal value could
amount to $700 million, according to a Wall Street Journal post.

Several foreign companies have reportedly shown interest in PV Power's IPO,
including South Korea's SK and Kospo, and Japan's Tohoku Electric Power.

International investors are being positioned for a greater opportunity than
ever to have a slice of the Vietnamese power sector, as the government is
acting more drastically in its privatisation of state firms. Although the
country has traditionally been known for delays in big IPOs of these
businesses, it is working on selling shares of several power generation
units at the same time, including subsidiaries of the Electricity of Vietnam
(commonly known as EVN) and Vietnam National Coal - Mineral Industries
Group.

PV Power is the country's second largest producer in the industry, after
only the EVN. As to push the delayed privatisation, the company has
restructured its operations through divestments from four subsidiaries and
four joint ventures, handing Phu Quy wind power plant to the EVN and
acquiring the Vung Ang 1 power plant from PetroVietnam.

Having produced 21.2 billion kWh of electricity in 2016, PV Power reported
VND26.5 trillion ($1.16 billion) revenue and VND1.6 trillion profit after
tax.

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Link to Original Article:
http://www.dealstreetasia.com/stories/vietnam-pv-power-mulls-selling-stake-t
o-foreign-investors-deal-to-fetch-700m-62976/

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John Diecker
APT Consulting Group Co., Ltd.

www.aptthailand.com