Economy Miniser Ion Ariton said last week that Petrom’s offering would take place in July, contradicting market speculations that the offering could be put off because of the unfavorable market context.
Although an agreement has been reached on a timing for the offering, a decision has yet to be made on the price at which the shares will be sold and on how they will be distributed (how many shares will be allocated to big investors and how many to retail investors), according to the cited sources.
The Petrom offering is the largest operation of its kind in the history of the Bucharest stock exchange, being estimated at EUR510 million, based on Wednesday’s closing price of 0.388 lei (EUR0.09) a share. The offering is brokered by a consortium led by Russian investment bank Renaissance Capital, which also includes brokerage firms BT Securities, EFG Eurobank Securities and Romcapital.
Representatives of the consortium did not wish to comment and those of the Economy Ministry could not be contacted.
Prime Minister Emil Boc said in April he wanted EUR690 million for this stake.
The price at which the 9.84% stake in Petrom will be sold is a fixed price, and this could pose problems during the offering because Petrom’s shares are listed and because the offering is very close to that of Alro (ALR.RO).
The broker is set to present the proposed price before the privatization commission by the beginning of next week, after which the price will be voted on by the government.
The price of the Petrom offering will be fixed, as was the case with Transelectrica (TEL.RO) and Transgaz’s (TGN.RO) initial public offerings (IPOs). As Petrom is already listed, publishing the offering price will trigger an adjustment of the market price to the new reference, according to some market sources.
Thus, it could prove difficult to sell the whole portion of shares set aside for retail investors (local individuals), considering that they could prefer to buy the stocks directly from the stock exchange, if they can buy them for the same price.
Another risk factor is Vimetco’s plan to sell 21% stake in Alro, which could be conducted in the first half of July, and which would, in turn, have a portion of shares set aside for retail investors. The prospectus for Alro’s offering has already been sent to securities market watchdog CNVM (National Securities Commission) for approval, according to market sources.
Both offerings have foreign institutional investors as their main target, but will also have share slices dedicated to retail investors.