Oxstones Investment Club™By Irina Savu and Andra Timu, Bloomberg,
Romania will seek to lure international buyers to its 2.56 billion-lei ($861 million) sale of shares in OMV Petrom SA (SNP) over the next two weeks, the biggest offering ever on the Bucharest Stock Exchange.
The government is selling 5.57 billion shares in the country’s dominant oil company, or 9.8 percent, at a maximum price of 0.46 lei per share starting today through July 22 and will hold promotional tours in European cities, including London, Frankfurt, Vienna and Warsaw, according to Ioana Tanase, the head of EFG Securities SA, one of the lead managers.
The eastern European country is cutting spending and bringing in revenue from sales of minority stakes in energy companies to meet pledges to the International Monetary Fund and the European Union, from which it secured two loans since 2009. The country plans to narrow its budget deficit to less than 3 percent of gross domestic product in 2012 from 4.4 percent this year.
“We believe this moment is very favorable for the share sale,” Thomas Unger, a Vienna-based analyst at Erste Bank, said in a phone interview. “Petrom is highly exposed to the evolution of oil prices, which are now growing, so its profitability should be very strong this year and next.”
Double Free Float
The share sale, which will be deemed completed if valid subscription reaches at least 80 percent of the offer, will more than double Petrom’s traded shares to 16 percent from the current 6.21 percent, said Valentin Ionescu, the chief executive officer of the Bucharest bourse. The offer will exceed previous share sales from state-owned utilities Transgaz SA and Transelectrica SA (TEL), which raised a combined 349 million lei in 2006 and 2008.
“The offer will have a positive impact on the free-float of the stock exchange, and thus on the liquidity,” Ionescu said in a phone interview. “Petrom’s free-float will basically double, once the offer is completed, and the bourse’s free-float will rise by as much as 15 percent.”
Institutional investors may subscribe for as much as to 85 percent of the offered shares, with the remaining 15 percent going to retail investors, according to the prospectus published on July 7. The final subscription price will be set for two installments, one for institutions and the other for retail investors, depending on demand. A minimum reference price may be also set.
Renaissance Capital, EFG Securities, BT Securities Romania SA and Romcapital SA are managing the sale.
Gas Discovery
Petrom’s shares rose 4.1 percent last week to 0.399 lei, after the sale announcement and a gas discovery in southwestern Romania, and were unchanged today as of 10:01 a.m. in Bucharest trading. Its shares have advanced 19 percent this year, the third-best performer on the Bucharest market, after chemical company Azomures SA and lender Banca Transilvania SA.
Petrom is majority owned by OMV AG (OMV) of Austria. The Romanian government currently holds 20.6 percent. Fondul Proprietatea SA, Romania’s 4 billion-euro ($5.7 billion) property-restitution fund, owns 20.1 percent of Petrom. The government is in the process of reducing its 18.9 percent stake in Fondul and aims to pull out completely as it compensates Romanians for property seized under the communist regime.
To contact the reporters on this story: Irina Savu in Bucharest at isavu@bloomberg.net; Andra Timu in Bucharest at atimu@bloomberg.net
Tags: BT Securities Romania SA, bucharest stock exchange, commodities, Eastern Europe, EFG Securities, gas discovery, government asset sales, oil, OMV AG Austria, OMV Petrom SA (SNP), Renaissance Capital, romania, Romcapital SA, utilities Transgaz SA and Transelectrica SA (TEL)