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BSR to fetch $88mn from Nov IPO

Released at: 13:50, 18/10/2017

BSR to fetch $88mn from Nov IPO

Photo: BSR

Company confident all shares will be sold, with a starting price to be announced just prior to the offering.

by Quang Huy

Binh Son Refining and Petrochemical Ltd (BSR), Vietnam’s sole oil refinery operator, plans to sell a 5 to 6 per cent stake to domestic and foreign investors at an initial public offering (IPO) on November 7, collecting an estimated VND2 trillion ($88 million).

BSR CEO Mr. Tran Ngoc Nguyen said he expected that all shares would be sold because the production situation, revenue, and profit of the company are positive from an investor’s viewpoint.

The starting price will be based on the market situation and reputable domestic and international companies will participate. “We will announce the starting price close to the IPO date and update the latest business results,” Mr. Nguyen added.

In the next 12 months, the company targets selling a 49 per cent stake to strategic investors, estimated at $1 billion and cutting down State ownership to less than 50 per cent.

In August, the Vietnam National Petroleum Corp. (Petrolimex) and BSR agreed to become strategic shareholders in each other, with the former to buy BSR shares at the November IPO. Petrolimex, which buys 42 per cent of BSR’s fuel output, the highest in the country, will secure a stable outlet for BSR’s gasoline, liquefied petroleum gas (LPG), and petrochemical products.

Director of the Vietnam Institute of Economics, Professor Tran Dinh Thien, said the strength of Dung Quat Oil Refinery is creating gasoline, an essential product for domestic and business purposes.

“With a processing capacity of over 6.5 million tons of crude oil per year and meeting over 30 per cent of domestic demand, BSR has stable cash flows,” he said. “This is a significant factor for large investors considering investing capital.” He added that BSR should build a strict, transparent and effective corporate governance system to develop sustainably and create trust among investors.

According to BSR’s business results for the first nine months of 2017, the company earned revenue of more than VND55 trillion ($2.4 billion) and after-tax profit of nearly VND5.5 trillion ($242 million), contributing over VND6.5 trillion ($286 million) to the State budget.

With a total capacity of 6.5 million tons per year, Dung Quat’s annual production this year is expected to reach 6.1 million tons, equivalent to about 122,000 barrels per day and nearly 20 per cent higher than its initial target, partly due to a tax cut on sales of gasoline and diesel fuel from the refinery.

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