Fondul Proprietatea sells 5% of Romania’s Romgaz for EUR 147 mln in private placement

Romanian investment fund Fondul Proprietatea (BVB ticker: FP) sold a 5 percent stake in state controlled gas producer Romgaz Medias (BVB ticker: SNG) for a total of EUR 147 million, the fund announced.

The sale price is RON 33.5 per share, which implies a 5.9 percent discount to the closing price for Romgaz shares on Monday (RON 35.6 per share). On Tuesday, Romgaz shares were down 3.4 percent, to RON 34.38, following FP’s announcement.

The fund’s manager, Franklin Templeton, announced its intention to sell 5 percent of Romgaz on Monday, June 16, after the market closing. The transaction was finalized on Tuesday, June 17.

The sale was conducted through a private placement addressed to no more than 150 qualified investors. Goldman Sachs International acted as sole book runner, while Erste Group Bank acted as joint lead manager in the transaction.

The deal was structured both in shares and global depository receipts (GDRs), as Romgaz is listed both on the Bucharest Stock Exchange (BVB) and on the London Stock Exchange (LSE), where the company’s GDRs are traded. One GDR stands for one Romgaz share. The sale price for GDRs was USD 10.32, which is also 5 percent below Monday’s closing of USD 10.99.

According to market sources, the demand for GDRs was higher than that for shares in this placement.

Romgaz was listed in November 2013, following an initial public offering (IPO) in which the Romanian state sold 15 percent of the company for EUR 390 million. Romgaz was the first Romanian company to be listed both on the Bucharest Stock Exchange and on the London Stock Exchange. The IPO was also managed by Goldman Sachs and Erste together with BCR and Raiffeisen Bank.

The Romanian state currently holds 70percent of the company’s shares. Fondul Proprietatea reduced its holding to 10 percent, following the recent transaction, while the free-float for the shares went up to almost 20 percent.

Romgaz is currently valued at EUR 3.01 billion, which makes it the second most valuable local company on the Bucharest Stock Exchange after OMV Petrom, which has a market capitalization of EUR 5.81 billion.

Last year, Romgaz had a net profit of EUR 225 million and net sales of EUR 881 million. The company paid dividends worth EUR 224 million to its shareholders.

Fondul Proprietatea is the largest investment fund in Romania, with net assets of EUR 3.47 billion at May 31, 2014. The Romgaz sales secures part of the funds that FP needs for its fourth share buy-back program, which could start later this year. The fund is close to finishing its third buy-back program which targets some 253 million shares. The fund already purchased 177 million shares for EUR 32 million and still has some 76 million shares to buy. The fourth buy-back program is for 990 million shares. The fund needs some EUR 200 million funds to finalize the two programs.

The buy-backs are aimed at reducing the discount between the market price of FP shares and its net asset value (NAV) per share, which currently is higher than 30 percent. The fund’s current market capitalization is EUR 2.53 billion.

Andrei Chirileasa, [email protected]

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