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Companies advised to exercise caution in choosing new partners

Update: November, 01/2014 - 09:11
Workers manipulate gold at Phu Nhuan Jewelry Joint Stock Company (PNJ). Selecting strategic partners has become a serious concern for listed companies. — VNA/VNS Photo Kim Phuong

HA NOI (VNS)— Selecting strategic partners has become a serious concern for listed companies, as large shareholders have recently withdrawn from such partnerships, pocketing much profit but leaving behind operational shortfalls.

Lately, PetroVietnam Drilling Services (PVD) announced that Mutual Fund Elite had reduced its stake in the company to 4.95 per cent and was no longer its large shareholder since October 27. The fund maintained a huge stake in PVD for only a month.

After the divestment, the fund reportedly earned VND655 billion (US$30.8 million) in profits.

Last September, Phu Nhuan Jewelry (PNJ) completely withdrew its 50 per cent stake in Saigon Fuel (SFC) and is estimated to have earned VND38 billion ($1.7 million).

The jewelry trader reportedly helped SFC improve its productivity by providing management expertise. After PNJ sent its people to SFC's board, the energy company's profits more than doubled to VND53.7 billion ($2.5 million) in 2009. Since that time, its revenue has been steadily increasing.

Remarkably, its first half profit has exceeded this year's target. Meanwhile, PNJ said it wanted to focus on its core business.

PNJ's departure compelled SFC to seek new partners. This time, the company chose companies in the same industry to ensure a long-term partnership rather than a short-term financial investment.

Nguyen Tuan Quynh, SFC general director, aims to transform his company into HCM City's leading fuel retailer in the next three to five years.

However, the key to a successful partnership is the agreement to speak in one voice, regardless of whether the parties operate in the same industry. For example, PVI Holdings (PVI) and its strategic shareholder, Talanx Group of Germany, are both into insurance.

Rumour has it that Talanx Group wanted to divest its entire 31.82-per cent stake in PVI. Nguyen Anh Tuan, PVI chairman, refused to grant Talanx's request to withdraw but admitted there were management conflicts.

"We and our mother group, PetroVietnam, have agreed on the scheme to equitise PVI Insurance Corporation, but Talanx disagrees," Tuan said. — VNS

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