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Lucian Anghel (BSE): Most likely retail investors will oversubscribe on their tranche in Romgaz IPO

23 October 2013

Retail investors bought 1.4 million shares on the first day of placement of purchase orders for Romgaz shares, representing a subscription of 16% in the segment created for them. President of the Bucharest Stock Exchange (BSE) believes that it is most likely that the offer will be oversubscribed because “it is a unique opportunity for the public because it gives a 5% discount in comparison to the price for institutional investors.”

In his view, Romgaz has all the benefits needed to attract the capital required for the success of Romgaz listing in London and Bucharest Stock Exchanges, and through this listing other securities would have the chance to attract the attention of local and Lucian Anghelinternational portfolios.

“It is the largest gas producer in Central and Eastern Europe, the state company with the highest profit of over one billion lei. It is a company with a strong foundation for future growth and I am confident that it will attract the interest of the local public, of the local investors and of the international ones. It puts us on the international map of capital markets and this is only beneficial for the market. Since they will acquire Romgaz shares, they will think to buy other titles if they are not already present in the local market”, says President of BSE Lucian Anghel.

Retail investors benefit from discounts only for securities purchased locally

The IPO will close on November 31 and the share price range was set between 24 lei and 32 lei, which means a price range of 7.38 dollars and 9.84 dollars for GDR, an investiment instrument that lists the Romanian gas producer on the London Stock Exchange. Transactions of purchased securities will begin on November 12 .

Retail investors have a 5% discount for purchase orders placed in the first five days of IPO, and from the sixth day discount drops to 3%. Price reduction applies only to the first 10,000 shares subscribed, not for GDRs. The shares are purchased at the maximum price. Romgaz hopes to get between 1.38 billion lei (311.7 million euros) and 1.85 billion lei (415.6 million euros), according to the price per share received in the end. This amount includes a stabilization fund of 13%.

If the IPO is successful, the state will hold at least 70% of the shares, Fondul Proprietatea will have a 15% stake and the 15% currently on offer will be traded freely in the market. Goldman Sachs International and Erste Group Bank deals with the procedure for the international offer, and Romanian Commercial Bank and Raiffeisen Capital&Investment SSIF coordinate the local market.

Romgaz IPO leads to price falls in Nuclearelectrica traded securities

Nuclearelectrica shares fell below the minimum listing price after two weeks of trading on the open market. At the closing of Tuesday transaction session, a Nuclearelectrica share was traded at a price of 10.99 lei, below the minimum listing price. Brokers say that the interest for Romgaz IPO drove down the prices of Nuclearelectrica allocation rights below a 11.2 lei/share. Moreover, Romgaz can lead to decreased performance on BSE of other companies as well.

Andrei RadulescuAndrei Rădulescu, Senior Investment Analyst in the SSIF Broker, told Bursa newspaper: “Investors are much more interested in Romgaz than was the case with Nuclearelectrica. It depends very much on what will happen with Romgaz after listing. If the price per share will be a small one, the titles will sell a lot, which will be felt further in the detriment of Nuclearelectrica. I think the chances are that Romgaz is going to send in obscurity other utility companies listed on the stock exchange.”

Mihai Mureşian, trading director for Intercapital Invest, also believes that Nuclearelectrica share price will continue to be positioned below the level of 11.2 lei/unit, at least for a few sessions: “Investors are trying at this time to raise money for Romgaz. I think that Nuclearelectrica price per share will continue to decline for several sessions. It is possible to return to a level of more than 11.2 lei/unit, but this is a matter of time. “

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