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March 7, 2021
BUSINESS

Petrom offering fails due to insufficient subscriptions

Brokers say unrealistic price and poor promotion made the largest oil company in Romania’s offering an unappealing one.

The offering by which the state intended to sell, on Friday, 9.84 pc of OMV Petrom’s shares failed, as investors subscribed less than 80 pc of stocks, and will be resumed, Mediafax reports.

“We will resume the public offering of Petrom stocks in the first quarter of the year to come, at the soonest,” the ministry of Economy, Commerce and the Business Environment, Ion Ariton, stated. Prime-minister Emil Boc stated, on Friday, that Romania was not desperate to sell the listed Petrom stocks at any price and under any terms, for now.

The selling of an approx. 10 pc-package is among the operations the Romanian authorities committed to before the Inter­na­tio­nal Monetary Fund (IMF) and the European Com­mission (EC). When asked whe­ther the adjournment of the offering for 2012 would call for a modification of the IMF agreement, the Economy Minister stated he would meet the Fund’s officials for talks early next week, but argued there was no need to revise the agreement. The offering was initiated on July 11 and closed on Friday, July 22, at 12 o’clock. The maximum price was set before the offering opened, at RON 0.46/stock. The offering was mediated by a consortium made up of the Russian investment bank Renaissance Capital, BT Securities, Romcapital and EFG Securities.

In the second half of Friday’s stock exchange session, OMV Petrom stocks were ebbing by 1.4 pc, to RON 0.378, at odds with the slight rise of the market. Thus, the stocks were pulled out from the Bucharest Stock Exchange, after the Economy Ministry announced the offering had failed.

Players on the capital market claim that poor promotion, the lack of information regarding subscription progress throughout the offering and, last, but not least, the last-minute setting of the minimum price led to  the adjournment of the biggest offering yet on the Bucharest stock market, for next year, at the soonest.

Mihai Chisu, broker at IFB Fin­west, argues that the Gover­nment should have taken into consideration the minimum price proposed by the brokering consortium, as this reflected the potential buyers’ expectations. The chairman of the Capital Market Investors’ Association, Dumitru Beze, argues, in turn, that the failed offering serves as proof of the Government’s failure to understand the importance of the capital market. Furthermore, Liviu Avram, the head of the brokerage company NBG Securities Ro­mania’s sales department, believes that a “realistic” price would have been RON 0.32-0.35/stock.

On the other hand, the Spea­ker of the Senate, Mircea Geoana, argued that the failure of the Petrom offering reflected the external markets’ perception of Ro­ma­nia, which, “despite the Gover­nment’s enthusiasm”, re­mains “wary”. The national currency lost its midday momentum and the exchange rate rose to RON 4.24/EUR, as some players, disappointed with the OMV Petrom offering’s failure, started buying euros. Another factor which influenced the market was the stall in rising trends across the region, according to dealers.

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