Big deal on Bucharest Stock Exchange: Fondul Proprietatea sells 2.5% of OMV Petrom

Fondul Proprietatea (FP), the biggest investment fund in Romania, put up for sale a minimum of 1.4 billion shares in OMV Petrom (SNP), the biggest local listed company.

The stake represents 2.47% of the company’s capital and has a market value of over RON 500 mln (EUR 105 mln), based on Tuesday’s the closing price (RON 0.371 per share), but the transaction is likely to close at a discount. The price of SNP shares went down 4% on Wednesday after Fondul Proprietatea announced its intention to sell.

The fund launched an accelerated bookbuild offering on Wednesday, September 16. Citigroup Global Markets Limited and Wood & Company Financial Services are the joint bookrunners for the transaction.

Fondul Proprietatea held 9.9% of OMV Petrom’s shares before this transaction. The fund has gradually reduced its stake in the oil company in recent years. The fund owned an initial stake of 20% in OMV Petrom and made its first sale in 2013. Since then, the fund has sold about 10% of the company’s shares.

Fondul Proprietatea needs cash to finance its share buyback programs aimed at reducing the gap between the fund’s share price and the net asset value per share, which is currently close to 19%. The fund manager’s options for getting cash are rather limited, given that unlisted companies make 70% of the fund’s portfolio. As the listing of power producer Hidroelectrica will probably be postponed for another two years, Fondul Proprietatea will continue to rely on OMV Petrom for quick cash. Still, the fund has agreed to a 180-day lock-up period in which it will not sell any OMV Petrom shares after this transaction.

OMV Petrom is the biggest oil and gas company in Romania, controlled by the Austrian group OMV (51%). The Romanian state also holds a 20.6% stake in the company. The group has a market capitalization of over EUR 4.1 bln.

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