Strategic cooperation - Reaching the Peaks (Hoàng Lộc - VietNam Economics Times - August 15 2007)

On the 12^th of August, a Sunday notwithstanding, in a ceremony at the Caravelle Hotel, HCMC, PetroVietnam Finance Company HCMC (PVFC-HCM) and Hoa Binh Construction and Real Estate Corporation signed an agreement of strategic cooperation and a memorandum for the joint venture regarding the construction of a 36-storied commercial center and five-star hotel complex at a nice location in the center of Nha Trang, of which the land area is 7,000 sq meters and the invested capital is US$ 70 million. Vietnam Economic Times has had an interview with Mr. Luu Quang Lam, Director of PVFC-HCM on this event. 

Interviewer: Could you explain why PVFC-HCM bought 1.2 million HBC shares at the total price of VND 78 billion (VND 65,000 /share), more cheaply than the two foreign investors, Chip Eng Seng of Singapore and Citadel Investment Fund of the US did. They bought HBC shares at the price of VND 76,920/share. Why did PVFC choose Hoa Binh Corp as a strategic partner?

Mr. LUU QUANG LAM: We negotiated with Hoa Binh Corp before the two foreign strategic partners did. We bought 1.2 million HBC shares at a price equivalent to 80% the actual price on the stock market at the time the two companies negotiated the contract of strategic cooperation.

Through research and studying we know that Hoa Binh is a very prestigious company in the field of construction and real estate. It is a trademark which is highly esteemed by both local and foreign investors, especially those investors who are highly demanding in their requirements about construction quality, execution speed, safety standard and cost sensibility…. Hoa Binh is a partner that can enjoy priority and trust of many companies in the areas of construction and real estate among which are big investors from abroad

On July 31, 2007 Hoa Binh also signed contracts of strategic partnership with Chip Eng Sang, a construction company from Singapore and Citadel Investment Fund from the US. In the past 20 years since it was first established Hoa Binh has developed very fast and has left the stamp of its trademark on a lot of projects that are of national scale and very significant to the national economy. Apart from that, Hoa Binh has a staff and work force of high professionalism, young and dynamic and very wholeheartedly devoted to their company. As a strong financial institution of The National PetroVietnam Group, we are confident that we will be able to bring about and contribute the financial strength to Hoa Binh Corp to help it develop and make it become a powerful construction and engineering group. 

Interviewer: Could you give us some information about PVFC’s strengths?

Mr. Luu Quang Lam: During the 7 years of development, PVFC has made a lot of important achievements in all aspects. PVFC increased its chartered capital to VND 3,000 billion at the beginning of 2007, and is going to raise it to VND 5,000 billion by the end of this year when we complete the process of equitization and transform the company into one that operates under the parent company model

The company’s chartered capital is expected to amount to VND 15,000 – 16,000 billion (approximately US$ 1 billion) in the period 2010-2015. Up to 31/7/2007, the total assets of PVFC are VND 33,600 billion, and the turnover in the first 7 months of this year totaled VND 1,887 billion. PVFC’s business network has expanded very fast with its subsidiaries such as: PVFC joint stock real estate company, PVFC Communications Company, PVFC financial fund Management Company….

PVFC itself affirmed since the day it was first established (over 4 years ago) its development direction to become an important financial institution on the monetary and financial market in the southern part of the country. In 2004, PVFC-HCM’s total assets amounted to VND 994 billion, was increased to VND 1,884 billion in VND 2005 and reached over VND 3,500 billion in 2006. The total turnover for these 3 successive years was respectively VND 99 billion, VND 266 billion and VND 512 billion. The projected turnover for 2007 is VND 700 billion. Similarly the profit in these years was VND 7.5 billion, VND 27 billion and VND 53 billion respectively. The projected profit for 2007 is VND 120 billion.

PVFC has planned to do IPO towards the end of September 2007 in order to carry out equitization with the ratio 30% of the chartered capital, (about VND 1,000 billion –– the projected chartered capital by 31/7/07 is expected to reach VND 3,000 billion). 70% of PVFC’s chartered capital will be owned by the state. At present PVFC is carrying out negotiations to find foreign strategic partners and there are more than 10 big financial groups and organizations in the world wishing to invest into PVFC