(Updates with analyst’s comments in fourth paragraph.)
July 28 (Bloomberg) — Vietnam National Petroleum Corp., the nation’s biggest gasoline and diesel supplier, raised more than the minimum target in an initial public offering after the government pledged to prioritize fuel importers’ profits.
The IPO raised 412.3 billion dong ($20 million) after the company sold 27.43 million shares, or a 2.56 percent stake, at an average price of 15,032 dong each at the auction organized by the Hanoi Stock Exchange today, according to the result displayed on the bourse’s electronic notice board. Bids totaling 30.09 million shares exceeded the number of shares on offer, with a minimum starting price of 15,000 dong.
The government would restore import taxes and allow fuel companies to make profits before lowering retail petroleum product prices for consumers in the event of declines in global prices, Deputy Finance Minister Nguyen Cong Nghiep said at a press conference on July 24.
“That has boosted investor confidence in Petrolimex’s profit outlook,” said Pham Xuan Anh, head of equity research at BIDV Securities Joint-Stock Co., the brokerage unit of Bank for Investment and Development of Vietnam.
The announcement marked a shift as the government had earlier been more concerned about consumers than companies, Anh said.
Unconsolidated profit will rise to 2.11 trillion dong in 2012 from 491.4 billion dong projected this year, according to a document released at an investor presentation on July 12. The government will “deal with” a 1.22 trillion dong loss incurred in the first three quarters, it said. The loss arose as the company sold fuel at below cost to help contain inflation and stabilize the economy.
The Ho Chi Minh City Stock Exchange’s VN Index has declined 16 percent this year on concern higher borrowing costs will crimp corporate earnings and economic growth. The index fell 0.3 percent to 408.39 as of the 11 a.m. local-time close.
Amid a slumping stock market, “being able to sell all the shares offered was a success,” Bui Ngoc Bao, chairman and chief executive of the company known as Petrolimex, said in an interview with Bloomberg News. The stock will be listed within the next two years, Bao said, declining to give details. In Vietnam, companies usually hold an IPO first, then list the equity on an exchange at a later date.
–Diep Ngoc Pham, Editor: Reinie Booysen