PetroVietnam Power Corporation (PV Power), the country’s second-biggest power provider, will offer 20 per cent of its total shares for sale at an initial public offering (IPO) in December. The member company of the Viet Nam Oil and Gas Group (PVN) will also sell 29 per cent of its capital to strategic investors.

Under a previous IPO plan published in April, the company said it would sell 4 per cent of shares at the IPO and 45 per cent to strategic investors to receive US$600-700 million. The previous plan also stated that the IPO would be conducted in August 2017 and the private offering for strategic investors would be completed this year.

The company also expected to raise its ratio of shares for sale up to 60 per cent if approved by the Government.

PV Power has constantly re-scheduled its IPO plan. In June 2016, the company planned to hold its IPO in October the same year and unload a quarter of the State’s ownership.

According to HCM City Securities Corporation, the company’s decision to raise the number of shares for IPO sale could stem from the fact that State-owned businesses have failed to offload all the shares they offered to strategic investors. Individual investors were far more interested in IPO shares and the number of their placed orders exceeded the number of shares offered by the companies.

According to analysts, there are several reasons that have made State-owned company IPOs unattractive to strategic investors.

First, those companies conducted their IPOs when market demand was not high, leading to low purchases of their shares. Second, institutional investors were hesitant to purchase shares in those companies because the Government still held the controlling stake in the businesses after it was equitised.

In addition, the auction prices offered at the IPOs did not match investor expectations while the management boards of some firms were afraid of becoming transparent and accountable.

In the latest IPO plan, posted on the company’s website last week, PV Power had VND21.7 trillion in charter capital and was valued at VND60.6 trillion on December 31, 2015.

PV Power is currently the second-biggest power provider in Viet Nam, supplying 12 per cent of the country’s total electricity production with seven power plants producing total output of 4.2 gigawatts.

The company last year produced 21,156 billion kWh, earning VND26.5 trillion in revenue and VND1.6 trillion in post-tax profit.

It targets production output of 21 billion kWh in 2017, VND30.8 trillion in revenue and VND1.56 trillion in post-tax profit. — VNS