Romania's Fondul Proprietatea to sell 5% of Romgaz shares via private placement

Fondul Proprietatea, the largest investment fund in Romania, will sell up to 19.24 million shares in Romania’s natural gas producer Romgaz Medias, via a private placement which will start immediately, the fund’s manager, Franklin Templeton, announced on Monday, June 16. The stake on sale represents 4.99 percent of the company’s capital and has a market value of EUR 155 million. The transaction is expected to be closed at a small discount to the current market price of RON 35.6 per share, taking into consideration similar transactions that Fondul Proprietatea made last year, but still the fund is expected to cash in more than EUR 140 million if it manages to sell the whole stake. The private placement is addressed to no more than 150 qualified investors. Goldman Sach is the sole bookrunner, while Erste Bank is joint lead manager. After this transaction, Fondul Proprietatea will still own a 10 percent stake in Romgaz, as it currently has 15 percent in the company. The transaction comes somewhat unexpectedly as many believed that FP would first sell a stake in Romanian oil&gas company OMV Petrom (BVB ticker: SNP). The fund holds a 19 percent stake in Petrom and announced earlier this year that it would reduce its stake under the 15 percent threshold. Petrom and Romgaz are some of Fondul Proprietatea’s most valuable stakes. Petrom makes 31 percent of the fund’s current net asset value, which was EUR 3.47 billion at the end of May 2014, while Romgaz stands for another 13.6 percent. Romgaz shares are currently trading at the highest levels since their listing on the Bucharest Stock Exchange, in October 2013. The company, which had EUR 225 million net profit last year, is currently valued at 13.8 times its profit (P/E). Petrom, which posted a historical profit of EUR 1.09 billion last year, is valued at 5.7 its net profit. The timing of Fondul Proprietatea’s placement is also unexpected, as it coincides with the initial public offering of Romania’s state owned electricity distributor Electrica. This started on Monday, June 16, and will end on June 25. Electrica seeks to get more than EUR 440 million from its dual listing on Bucharest Stock Exchange (BVB) and London Stock Exchange. It’s a first for Romania’s capital market to have two transactions of this dimension happening at the same time. Andrei Chirileasa, andrei@romania-insider.com