HO CHI MINH CITY -- A petrol station operator under state-owned Vietnam National Oil and Gas Group has abandoned its search for a strategic foreign investor and will likely turn instead to multiple buyers in a proposed 45% stake sale.
With the domestic stock market slumping, PetroVietnam Oil has presented its parent company with a revised divestment plan to raise at least $300 million, according to Cao Hoai Duong, a general director at the gas station operator, which is known as PV Oil.
A source from PV Oil told the Nikkei Asian Review that the new plan is expected to receive approval from the parent "soon," with bidding to start in 2019.
The new plan comes months after PV Oil, Vietnam's second-largest gasoline retailer, failed to secure a strategic foreign partner by an April deadline. The time limit followed an initial public offering in January in which the company floated a 20% stake. The parent, known as PetroVietnam, still owns about 80% of the fuel distributor.
Analysts blamed the complicated administrative procedures for discouraging potential investors. PV Oil required a strategic partner to hold the stake for at least 10 years.
PV Oil's new proposal does not mention this requirement. The distributor now seeks to divest a 44.72% stake in the form of "large portions, not to split it into small pieces," according to Cao Hoai Duong. Local media and investors speculate that PV Oil will seek to tap multiple major investors.
Foreign investors have shown interest in the unit. SK Energy, part of South Korean conglomerate SK Holdings, appears the most eager of the bunch, which also includes oil major Royal Dutch Shell, Japan's Idemitsu Kosan, Thailand's PTT and Kuwait Petroleum International.
In November, SK Energy emerged as PV Oil's second-biggest shareholder, with the local stock exchange revealing that it had built a 5.23% stake. In Vietnam, shareholder names are disclosed when their ownership reaches 5%.
Meanwhile, Shell informed PetroVietnam that it was studying the divestment plan and was willing to partner with PV Oil, a representative of the Dutch-British oil major told Vietnamese media this month. Shell, seeking more opportunities in the local market, looks to work with Vietnamese businesses to supply liquefied natural gas for PetroVietnam projects.
PV Oil's initial plan fit with the government's policy to accelerate reforms of state-owned enterprises, the main drivers of the communist country's fast-growing economy.
The government has given a nod to the plan for selling roughly 45% of PV Oil, but Hanoi said in December 2017 that foreign investors are allowed to own only up to 49% of the company. Foreign ownership remains capped at less than a majority stake in the energy sector, which is deemed sensitive for national security.
Hanoi's approval for the new plan may suggest a change in stance on state-sector reform in response to a slumping stock market. Vietnamese shares have lost steam as escalating trade tensions between the U.S. and China have dampened investor sentiment. The VN-Index has fallen more than 20% this year, dropping below 920 on Wednesday since hitting its record of just over 1,200 in April.
PV Oil runs 540 filling stations itself and has about 3,000 locations operated by agents, mostly in northern Vietnam, as well as about 120 gas stations in Laos.
PetroVietnam is one of the three biggest state-owned groups in Vietnam and a major contributor to state coffers. In January, PetroVietnam was rocked by corruption investigations involving former executives.
Petrolimex, the biggest state group in the oil industry, was also on the list of planned 2018 divestments. It is expected to sell a 24.86% stake in order to raise funds for new projects, but the company has postponed these plans to 2019 or 2020, citing unfavorable stock market conditions.