The final price of the offering will be announced on Wednesday, once the underwriters finalize centralizing orders and allocate shares.
Investors and brokers were speculating on the final price on Tuesday ahead of the official announcement. Most estimates in the market pointed to 180-190 lei (EUR41 to EUR43), below the RON191.92 per share of the 10% sold during Transgaz’s IPO in December 2007.
Transgaz opened lower at RON193 on Tuesday but closed at RON197. No one bet on a price above the stock market price, considering investors usually want to buy shares in a public offering for less than the market price.
Investors hope to get as low a price as possible, so as to maximize profit potential. On the other hand, the government hopes to get as high a price and therefore collect more money.
The government put up for sale 15% (1,766,077 shares) in Transgaz on April 4, setting a minimum price of RON171 and maximum price of RON230. Transgaz was trading for RON213.5 at the time and has dropped 7.5% in the meantime.
The government will collect RON291 million to RON393 million in net amount depending on the final price and the underwriters will get RON10 million to RON13.5 million. The undwriting syndicate is composed of brokerage firms Raiffeisen Capital & Investment, BT Securities and Wood (Czech Republic).
The most important of the three tranches is the institutional investor tranche, which accounts for 85% of the total number of shares in the SPO.
Subscription on this tranche was kept secret in a closed book, therefore only the underwriters knew the subscription level on Tuesday and their representatives would not provide any comment before the final results are out.
They had a lot of orders to process on Tuesday because most investors came in the last day to avoid keeping their money stuck for a longer while. Therefore order sorting and share allocation lasted until late Tuesday night.
The tranches allocated to the retail investors were oversubscribed according to the information available on the stock market at 2 p.m. on Tuesday.
On the small order tranche, where investors could place orders for 10 to 1,000 shares, total demand stands at 343% of the total allocation. Investors in this tranche will get a discount to the final price, 5% for those who subscribed in the first few days and 3% for those who subscribed later.
Demand on the large order tranche of more than 1,000 shares, stands at 187% of the number of shares allocated. In other words, the tranche was 87% oversubscribed and most orders came in the last day. Both small order and large order tranche investors will get less than they asked for, once the allocation is set after centralizing all orders.
Besides the discount offered, retail investors were also attracted by the high dividends Transgaz pays. The company proposed a gross dividend of RON21.29/share of the 2012 profit. The dividend yield calculated against Tuesday’s stock market price, RON197, was 10.8%.
(English version by Loredana Fratila-Cristescu)