Romgaz shares start trading on Bucharest Stock Exchange 19% above IPO price

The shares of Romanian gas producer Romgaz began trading on the Bucharest Stock Exchange on Tuesday morning (November 12) at a price of RON 35.84, about 19 percent above the price in the Initial public Offering (IPO) earlier on October. After an hour of trading, share prices stayed within the interval RON 34.92 and RON 34.98. Small investors who had a 5 percent discount on IPO prices and who chose to sell in the beginning of trading on November 12 marked a 22 percent profit, while those who bought at RON 30 in the IPO had a gain of 16 percent. In the first two hours of trading, over 2,300 transactions with Romgaz shares were made on the Bucharest Stock Exchange. Romania raised EUR 390 million via the oversubscribed Romgaz IPO in late October. The 15 percent sale via the IPO was a success, and a higher than expected demand was registered from small investors, which initially had been allotted a 15 percent part of the offer, which was then raised to 20 percent. The sale price per share was of RON 30 – the equivalent of some EUR 6.8 per share. Overall, the Romanian state sold 57.8 million shares, with the price in the offer going from RON 24 to RON 32. More than half of the offer – 64 percent, was made of shares listed on the Bucharest Stock Exchange, while the rest was made of Global Depositary Receipts (GDR) listed on the London Stock Exchange LSE. Trading on LSE started on the same day as in Bucharest, on November 12. The demand from institutional investors, such as investment funds, during the IPO was higher for GDRs than for shares, as funds prefer to sell GDRs on the LSE. Romgaz reported total gas sales revenues of EUR 586 million (RON 2.58 billion) in the first nine months of the year, down 10 percent compared to the same period in 2012. The company’s revenues from domestically produced gas sales went up 2.8 percent in the first nine months of 2013 against the same period the previous year, to some EUR 424 million (RON 1.86 billion). However, the revenues from sales of imported gas fell by over 58 percent year-on-year, to EUR 80.4 million (RON 354 million), the company said in an amendment to its IPO documents. In the third quarter of 2013, Romgaz’s gas production rose by 1.8 percent against the same period in 2012. editor@romania-insider.com