Romgaz IPO, at the end. Romanian Government gets 1.7 billion lei

Romgaz has successfully completed its first IPO (initial public offering), the Romanian state succeeding to raise RON1.7 billion (USD534 million), nearly to the maximum targeted amount of RON1.85 billion. The offering started on October 22 and ended yesterday and the price per share that initially was estimated between RON24 and RON32 was established closely to the maximal price - RON30 per share and USD9.25 for a GDR (Global Depository Receipts), respectively.

The IPO that was carried out a day ago is the largest offering run by now and is a premiere by the fact that is the first privatization of a Romanian company that includes a GDR component, receipts that will be traded on London Stock Exchange. Hence, out of almost 57.9 million existing shares – the equivalent of 15% of Romgaz social capital, the total number of GDR is nearly 20.9 million, while the allocated shares amount approximately 37 million.

There was a huge interest in the Romgaz IPO, partially unexpected, so that the offering was oversubscribed several times. Thus, even though the IPO offering stipulated that the small investors have assigned 15% of the total shares, it was decided to supplement it, Romgaz announcing that they will receive another 5%. As for the institutional segment, the offering was enthusiastically approached, the foreign investors acquiring 60% of the available shares, while the Romanian buyers got the remaining 40%.   

‘The public offering was an important step in Romgaz strategy for becoming a regional leader in exploration, production and providing of energy. The IPO enjoyed a high-quality demand from investors in all areas where the offering was made. The successful setting of the price for our offering is a clear support for the potential Romgaz has and reflects a strong appetite of investors for developing the gas industry in Romania.‘ Virgil Marius Metea, General Manager of Romgaz, said.

Another confimation of its success came from Constantin Nita, Romania’s Minister Delegate for Energy : ‘The way the IPO of Romgaz (...) was received is a reflection of investors’s appetite for a high-quality exposure towards Romania’s energy sector. Our engagement for an ambitious program of liberalizing the price on the market assured the success of the offering, both for Romanian investors and for the international ones.’

Having the IPO finalized, Romgaz announced that the GDR trading on London Stock Exchange, as well as the trading on Bucharest Stock Exchange (BVB) are going to start on November 12, 2013. Also, after its completion, the Ministry of Economy, through the Department of Energy, has 70% of Romgaz’s capital, whereas Proprietatea Fund (FP) keeps the remaining 15%. The Ministry and FP committed to a 180 days lock-up period under some exceptions and existing obligations once the trading will have stated on BVB and London Stock Exchange.

Additionally, the company informed that Goldman Sachs and Erste Group Bank, the global intermediaries of the IPO will retain 13% of the gross revenue the seller got in order to use them for stabilizing operations for a 30 days period after the trading effectively begins. Locally the offering was coordinated by BCR and Raiffeisen Capital & Investment S.A.

Romgaz is Romania's largest natural gas producer and supplier, its main activity involving the exploration and production of natural gas, the supply of natural gas or the storage in underground depositories and electricity production. In 2012, Romgaz produced almost 6 billion cubic meters of natural gas, being one of the most profitable companies in Romania.