The BSE didn't make the news on TV, not even with the help of the Romgaz IPO

"We can celebrate, we can congratulate each other, but let's not get overexcited" - that could have been the slogan for the event of the decade - the IPO of Romgaz - on the Bucharest Stock Exchange.

News channels did not publish any "breaking news", live from the BSE. On the other hand, they covered the trip of the Prime-Minister to London, where he attended the launch of the Romgaz GDRs, on the London Stock Exchange. Some channels were even having special editions about "the listing of Romgaz in London", without one word about the fact that the company was trading in Bucharest as well.

Having left for London, the prime-minister and the delegated minister for energy Constantin Niţă have sent in their subordinates to represent them at the event of the BSE, more for appearances' sake. Dante Stein, the advisor to the Prime-Minister, and secretary of state Mihai Albulescu have handled the issuing and receiving of congratulations. The only one who actually had anything to do with what was happening on the BSE was Gabriel Dumitraşcu, the head of privatizations of the Energy Department.

The departure of our government officials for London and the opening of the transactions over there have ruined the event in Bucharest, and as a result the Bucharest Stock Exchange missed another opportunity to escape obscurity.

The CEO of the BSE Ludwik Sobolewski ended the event dedicated to the IPO apotheotically - with commemorative booklets for the participants in the IPO and without a Q&A session for journalists, to avoid anybody asking any unpleasant question, such as: "But why is Mr. Ponta not here?" or "What exactly did the marketing campaign of the BSE for the < IPO of the decade >" or "Why are we so glad that we only got 390 million Euros for 15% of Romgaz, when we wanted to get 600"?

• Record liquidity

Shares of Romgaz began trading at 35.85 lei, up 19.5% over the price of the big tier of the IPO.

Total trades of 92.5 million lei with Romgaz (symbol: SNG) shares happened, which accounted for 82.7% of the liquidity of the entire session, which was the highest on the BSE, in the last two years. The price of SNG ended the session at 34.5 lei/share.

The IPO of Romgaz is the first to have a price stabilization mechanism, by which the underwriter can place trades intended to uphold the price.

Gabriel Dumitraşcu, the head of the Privatization Office of the Department for Energy, expressed his pleasure at the opening price of Romgaz. "I am very pleased, the price has exceeded expectations", he said.

A few months ago, the authorities were saying that they were looking to raise a maximum of 600 million Euros for 15% of Romgaz. Thus, the only goal of the initial demands of the state seem to have been to justify the launch of certificates of deposit in London.

Even if the state gave a discount on the IPO, no one is saying anything about it and everybody is happy that the deal concluded that the deal was successful.

On the other hand, Ioan Niculae, the owner of InterAgro, one of the clients of Romgaz, says that the company isn't worth its valuation on the Stock Exchange: "The capitalization of Romgaz is inflated, due to speculation". He says that this value will drop, as Romania and Europe will also use alternative gas sources. The valuation of Romgaz on the Exchange has no connection to the reality of the company, Ioan Niculae says.

He says that the "entire oversubscription falls on the shoulders of the industry": "For a shrinking turnover, the government has increased the profit, as through a decision, 70-80% of the extracted gas has been reinjected".

Ioan Niculae told us: "They've killed consumers due to the huge price they set for gas and that is why the company is reinjecting natural gas without selling it. The natural gas goes into warehouses without being billed, and then they get a 40% higher price to sell it in winter".

• Dăianu: "The IPO will eliminate this kind of problems (ed. note: the bribe denunciation at Hidroelectrica)"

Daniel Dăianu, the first-vice-president of the Financial Supervision Authority, considers that the IPO of Romgaz will also send a message about improving corporate governance: "Look at the mess that surfaced at Hidroelectrica (ed. note: the attempted bribe offering denunciated by Remus Vulpescu). The IPO will eliminate this kind of problems".

According to Daniel Dăianu, the results of the Romgaz IPO proved that there is potential on the local market, there are savings and a tendency to invest when there are attractive companies on the stock market.

In his opinion the structure of the IPO - shares on the BSE and GDRs in London, was adequate, because international visibility was needed.

"It is important for the BSE to achieve visibility, especially since bank lending is in trouble", said Daniel Dăianu, who added that for many companies, the stock market could be the difference between life and death.

• Ludwik Sobolewski considers that the Bucharest Stock Exchange has lots of work to do

Ludwik Sobolewski, the CEO of the BSE, considers that the Exchange has a lot of work to do, for the Romanian companies not to be privatized through GDRs in the future.

He said: "We shouldn't be fooling ourselves about these GDRs, they are not a sign of development, but rather of underdevelopment".

It was visible yesterday that the GDRs completely stole the thunder of the stocks on the BSE, at least when it comes to their visibility in the news, so it is easy to understand why the Romanian Stock Exchange no longer wants this kind of products in the future IPOs. Tough luck! After minister Constantin Niţă rushed to announce, at the very event held to celebrate the closing of the Romgaz IPO, that he would keep the GDRs as an option for the future IPOs, Prime-Minister Victor Ponta backed that promise. The Prime Minister said yesterday, at the event for listing the Romgaz GDRs on the London Stock Exchange: "After this success story, we need to look forward and we will go back next year to London, with Hidroelectrica, Electrica and other Romanian public companies. And by that we are hoping to send a strong and important message to the international companies, that Romania is showing its openness to the world and it can tap into a potential it has not used until now".

• Underwriters for Hidroelectrica, in January

The state will resume the process for the selection of underwriter that will assist in the IPO of Hidroelectrica, according to Gabriel Dumitraşcu, who said that the new underwriter should be selected by January.

Gabriel Dumitraşcu said: "We will resume the selection of the underwriter after a new government decision gets approved. The Hidrosind union won in court the annulment of the previous government decision, made during the term of the Boc government.

In April 2012 the joint venture between BRD (consortium leader) - Citigroup - Societe Generale - Intercapital Invest was selected to assist in the listing of Hidroelectrica, but the underwriting contract was not signed.

Gabriel Dumitraşcu also said: "In the first half of January I hope we will already have selected an underwriter for Hidroelectrica, and towards mid-year we hope to perform the IPO. There are still discussions on whether we would sell 10% of 15%, we are waiting for the Government Decision to come out".

The delegate minister for Energy, Constantin Niţă, announced in early November that the state could sell 15% of the electricity maker, instead of 10%, like it initially intended. The new size of the stake to be sold was decided after the talks with the IMF.

Gabriel Dumitraşcu also said that it would be premature to estimate how much money Hidroelectrica could raise following the IPO, especially as it has been less than a year since it exited insolvency.

Remus Vulpescu was recently offered a bribe of 1,400,000 Euros, to vote in favor of a preferential contract between Hidroelectrica and Energon Power&Gas.

Referring to this event, Gabriel Dumitraşcu said that "all the events in the life of a company can have a negative or a positive influence on the IPO".

Mr. Dumitraşcu also said that in the next IPOs, he is considering a cap on the subscriptions on the retail tier, after the oversubscription levels soared on the tier for retail investors on the last day of the Romgaz IPO.

He said: "What happened on the last day of the Romgaz IPO was not alright. On the next-to-last day, the offer was oversubscribed five times, and on the last day it became oversubscribed 17 times. The investors who do not know the subtleties of the stock market were discouraged".

He said that the structure of the IPO will be reviewed for each individual case, but, as a principle, he does not support increasing the small tier, claiming that the state has to take care of the evolution of the stock on the market. In his opinion, if more shares are given to the small investors, a lot of them would be put up for sale in the first trading session, which could cause the price to drop.