Vietnam's sole refinery plans 1.9t-dong IPO on November 7

[HANOI] Binh Son Refinery & Petrochemical Co expects to raise about 1.9 trillion dong (S$110 million) from selling a 4 per cent stake during an initial public offering November 7 while it weighs potential bids from strategic investors, Chairman Nguyen Hoai Giang said.

The company, which operates Vietnam's only refinery, Dung Quat Oil Refinery, is awaiting government approval for its plan to offer 132 million shares in the IPO, Mr Giang said in an interview in Hanoi. The proposed initial share price is 14,600 dong each, he said. The company expects to sell 49 per cent of the refinery to strategic investors next year, Mr Giang added.

"Refineries are very interesting for investors," said Michel Tosto, head of institutional sales and brokerage at Viet Capital Securities JSC. "The question is how open is management to investors."

The refinery expects government sign-off on its IPO plan within three weeks, Mr Giang said. Prior to the IPO, the company will conduct roadshows in Hanoi, Ho Chi Minh City and Danang, he said.

The sale comes as the government wants to accelerate the equitization process of state-owned companies. In addition to Dung Quat, the government aims to sell its stakes in Saigon Beer-Alcohol-Beverage Corp and Hanoi Beer Alcohol and Beverage Joint Stock Corp.

State Capital Investment Corp, the government's investment arm, announced last week plans to sell an additional 3.33 per cent stake in Vietnam Dairy Products JSC this year.

The benchmark VN Index of Vietnamese stocks has rallied 16 per cent this year after rising 15 per cent in 2016.

Companies interested in strategic shares in the refinery include Repsol SA, World Petroleum Corp and Vietnam National Petroleum Corp, known as Petrolimex, according to Mr Giang. There are about 17 other local and foreign investment firms interested as well, he added.

"The sale is open to both local and international investors, but we will give priority to partners which operate in the same industry and can help us to become bigger and more efficient," the chairman said.

Binh Son Refinery is seeking a financial adviser on its plan to borrow US$1.2 billion for Dung Quat Refinery expansion, to be completed by 2022, he said. After the expansion, the refinery, located in the south-central coastal province of Quang Ngai, will produce 192,000 barrels a day from 148,000 barrels currently, Mr Giang said.

"We hope to meet as much as 45 per cent of domestic demand after the expansion from the 30 per cent currently," Mr Giang said.

BLOOMBERG