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Genco 3 IPO plan awaits PM's approval

Released at: 11:45, 28/08/2016

Genco 3 IPO plan awaits PM's approval

Photo: Duc Anh

EVN to sell 49% of $1.12 billion holding.

by Duy Anh

The initial public offering (IPO) plan of the Power Generation Corporation 3 (Genco 3) under Electricity of Vietnam (EVN) has been submitted to the government for the Prime Minister’s approval.

With the State holding some VND25 trillion ($1.12 billion) and the plan to sell up to 49 per cent there will be a large amount of shares on offer.

The most important factor in determining the IPOs success, according to Genco 3’s Chairman Mr. Nguyen Van Le, will be the electricity price.

The blueprint for EVN’s equitization is that, following Genco 3, Genco 1 and 2 are to be equitized and operate independently. The government previously directed EVN to equitize Genco 1, 2 and 3.

Genco 1’s valuation is currently being assessed by its consultant unit and will be forwarded to its IPO Steering Committee for review.

Genco 2’s equitization process has only just begun, with an IPO Steering Committee formed recently. The three equitizations are also part of EVN’s reform target during the 2016-2020 period.

According to EVN Chairman Mr. Duong Quang Thanh the criteria set for the reform process during the period is to organize the reform of EVN’s corporations to improve generation and productivity so that Vietnam moves into the top 4 ASEAN countries in electricity.

As at the end of 2015 EVN had completed all of its reform plans for the 2012-2015 period. The overall target was to completely divest from all holdings in non-primary sectors and reduce its holdings in seven joint stock companies, as directed by the government. This went much better than expected, with EVN recouping its initial investment in non-primary sectors and even reporting capital gains.

EVN completely divested from the seven joint stock companies, in real estate, securities, finance, banking, and insurance, brining in VND1.96 trillion ($87.8 million).

It also completely divested from two joint stock companies within its primary business: the Central Area Electrical Mechanical Company (CEMC) and the Power Engineering Company (PEC), and reduced its holdings in the Thu Duc Electro Mechanical Company (EMC) and the Dong Anh Electrical Equipment Corporation (EEMC).

Power plants are investments in infrastructure and investors must be prepared for a long haul of ten to 15 years. They can be quite profitable, though not to the same extent as in other fields, but in the long term they are less risky.

Even though EVN is focusing its resources on executing its reform process as directed by the government and the Ministry of Industry and Trade (MoIT), a company official said its equitization must ensure that power plants continue to operate normally, as this relates to secure electricity supplies throughout the country.

In August 2014 MoIT approved the initial plans to equitize Genco 3, with a valuation to be conducted by January 1, 2015. The plan aimed to conduct an IPO in March 2016 and then hold its first shareholders’ meeting a month later.

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