Demands of exclusivity
According to VIR, there are at least three bottlenecks in the negotiations between ACV and ADP that require the urgent attention of competent state agencies in Vietnam.
First, the French partner wants to establish the principle “One airport-one operator” in all airports currently managed by ACV through a decree or a circular issued by the Ministry of Transport (MoT) before completing the acquisition of the stake in ACV. ADP’s representative said that this is the most important principle as it would ensure the investment’s value.
This means that ACV will be the only operator even when the airports are expanded or upgraded. There is no exception for Tan Son Nhat International Airport, where currently domestic investors are lining up with investment proposals for terminals T3 and T4.
ACV said that ADP’s proposal is different from the previous consensus signed at the beginning of January 2017. Besides, the issue exceeds ACV’s competence to decide.
Another matter, also beyond ACV’s authority to decide, is that ADP wants to have some assurance that ACV is going to earn somes benefits from Long Thanh International Airport. In ADP’s opinion, if Long Thanh International Airport is put into operation, a part of the revenue of Tan Son Nhat Airport, which is currently the biggest money-maker to ACV, will be reallocated. Thus, without assurance of the benefits, the operation of Long Thanh airport may influence ACV’s activities, which leads to a negative effect on ADP’s investment.
There is also disagreement over the price of shares to be sold to the strategic partner. In particular, ADP wants the price to be negotiated based on various pricing methods with expectations suitable to ACV’s business and strategies. Meanwhile, ACV wants to set the price based on the price of its shares on the UPCOM platform—where more than 2.2 billion ACV shares are listed.
ACV’s process of selling stakes to strategic investors started in January 2016. ADP was the only name that was approved by the MoT on the list of strategic investors. Since then, there have been three negotiation sessions, leaving the above bottlenecks. ACV was supported by two consultants: BIDV Securities Joint Stock Company (BSC), the financial strategy consultant, and YKVN, the legal consultant.
ADP and ACV a potential synergy
Before being converted into a joint stock company, ACV’s total chartered capital was over VND21 trillion ($919 million), which was equivalent to 2.177 trillion shares at a par value of VND10,000 ($0.44) apiece. The state owned 2.007 trillion shares (95.4 per cent of the total), while others 100.23 million shares (4.6 per cent of the total).
ACV’s shareholder structure will change after the sale of shares to ADP. In particular, the state will own 75 per cent, strategic investors 20 per cent, and common shareholders 3.47 per cent.
In a March 2 meeting with Augustin de Romanet, ADP’s chairman and general director, the Minister of Transport Truong Quang Nghia said the ministry would do everything to facilitate ACV and ADP to finalize the deal soon.
The MoT requested ACV to report in detail on all the disagreements so that the government can offer solutions soon, especially the disagreement involving ACV’s operating rights in several airports.
Currently, the price of the shares to be sold to ADP has not been released yet, however, previously, ADP offered to buy at the price equal to the lowest successful bid at ACV’s IPO, which is VND13,100 ($0.57) per share. This price is the lowest threshold approved by the MoT.
With this price, ACV is expected to gain VND2.8-3 trillion ($122.6-$131.3 million) if it can finalize the deal with ADP.
ADP, with vast experience in operating and managing many big airports in Europe, promises to be an ideal partner.
A few successes of ADP include investments in Zagreb Airport (Croatia) in 2013, Santiago de Chile Airport in 2015, and Madagascar Airport in 2015. With the participation of ADP as an operator or a strategic shareholder, all these airports have positive business results.
Meanwhile, ACV’s stable and positive business results and its monopoly of operation at many airports have attracted ADP.
Although the official financial report for 2016 has not yet been released, ACV’s preliminary results still satisfy its shareholders. In 2016, ACV earned a revenue of 14.504 trillion ($635 million). Particularly, revenue from goods and services was VND13.394 trillion ($586.4 million), increasing by 25 per cent compared to 2015, and pre-tax profit was VND4.075 trillion ($178.5 million).