OVERSUBCRIBED SPO The discount granted by the state has ensured the success of the "Transelectrica" secondary offering

The public offering of "Transelectrica" (symbol: TEL) has been oversubscribed by 34.18%, with the highest interest coming from retail investors who subscribed 2.844 million shares of TEL (258.71% of their allocated tranche) at prices ranging between 14.90 and 19.20 lei/share.

By the final day of the offering, investors subscribed 11.908 million shares of TEL (120.34% of the tranche that was allocated to them) at a top price of 16.10 lei/share.

During Monday's session, 54.98% of the offering had been subscribed, whereas, in order to make the trade successful, it was necessary for 70% to be subscribed.

The final price for the sale of the stake of 15% of the shares of TEL will be set in the next two days.

In order to calculate the allocation price, the subscriptions will be arranged in descending order, until the offering will be completed.

The representatives of the intermediation consortium have said that the shares subscribed at a price higher than the offering price will be fully honored .The remaining shares will be prorated at a price equal to the SPO price, using the algorithm of the Bucharest Stock Exchange.

• Ovidiu Dumitrescu, "Tradeville": The success of "Transelectrica" depended on the granted discount

Ovidiu Dumitrescu, analyst at "Tradeville", considers that the most important benefit which the SPO of TEL had compared to that of the SPO of "OMV Petrom" last year was the significant discount which it offered compared to the price the stock is trading at.

In his opinion, the market context is also favorable.

"The influence of the favorable context on the international markets was extremely important, even though it wasn't decisive", he said, and he went on to say: "There are still uncertainties, but the general perception seems to favor risky assets, such as stocks".

Ovidiu Dumitrescu considers that there are three important factors of a general nature: the climate of the international markets, the willingness of the government and the international commitments.

"As long as the first two factors remain positive, the outlook is favorable. Since there are requirements in this regard from the main foreign creditors, it is to be expected that the schedule will continue".

He also mentions that aside from the three aforementioned factors, there is also the success of the offerings conducted until the date the decision was made: "Thus, the failure of the Petrom secondary offering led to a potential success of the offering of TEL, and in my opinion, it would have a positive effect on the future IPOs and SPOs which the government intends to conduct".

Ovidiu Dumitrescu considers that "Transelectrica" has a good economic potential, given the fact that it has the monopoly in the high tension electricity transport.

In the short term, he feels that the company's high need for investments (by 2017, the company plans to develop and modernize infrastructure, a program which has an estimated cost of 1.1 billion Euros).

"Thus, even if it is to be expected that these costs will negatively affect the net outcome of the coming years, the outlook for higher energy consumption as well as the inclusion of the aforementioned costs in the tariffs set by law should, in our opinion have a positive effect on the company's worth", the aforementioned analyst concluded.

• Eugen Voicu, "Certinvest": The government was more flexible than in the case of the Petrom SPO

Eugen Voicu, the president of "Certinvest", considers that the success of the "Transelectrica" offering sends a positive signal to the future listings which are expected to take place in the coming period.

"The government was more flexible in this offering than it was in the case of the SPO of Petrom, and I also think that it paid more attention to the recommendations of the consortium which intermediated the listing", he said.

• Victor Cionga, "AZ Capital Advisors": The most important thing is that the offering of TEL is a success

Victor Cionga, managing partner at "AZ Capital Advisors", told us that the most important thing is that the offering of TEL has been a success.

"It is a truism to say that the success of the TEL offering will have a positive impact on the entire domestic stock market and that it will make the next listings, those of Transgaz, Romgaz, Hidroelectrica; but only if all of those involved in this one (and who will be just as involved in the future) will know how to manage this success", he said.

In the opinion of Victor Cionga, this positive development should not cause the much needed modernization of the regulations of the stock market take a back seat (as they are rather cumbersome compared to the regulation of the European markets) as well as in terms of the costs of investors.

Mr. Cionga considers that the pleasant surprise of the TEL offering was the reaction of the retail investors: I hope that this trend will continue in the case of other offerings where the value of the retail tranche will be bigger (not necessarily percentage wise)".

In his opinion, the minimum price of the retail component will be somewhere around 15.55-15.70 lei/share. Mr. Victor Cionga said that the price of the institutional sections is much harder to predict, but he said that if he attempted a guess, he would put the lower limit at 15.10-15.35 lei /share.

• Andrei Rădulescu, SSIF Broker: "The fact that powerful investors have subscribed at the minimum price could represent a lesson for the state"

SSIF Broker analyst, Andrei Rădulescu, says that what stands out in the offering of "Transelectrica" is the fact that the price on the tranche allocated to big investors was 14.9 lei: "Major investors are more aware of the company's specific risks, as well as of the macroeconomic and financial risks. In my opinion, major investors are more interested in the opportunity to invest for the medium and long term. Aware of the risk that exists, they opted to subscribe at the minimum price of the offering".

He said that the price on the retail investor tranche was 15.6 lei. "Small investors, who were more interested in the speculative side of the offering (the idea of getting a short term profit) chose to subscribe at a price higher than the minimum price, but below the market price", Andrei Rădulescu said.

The quoted analyst says that he was expecting a successful offering at a price below 16 lei (according to the fundamental analysis of the issuer).

"The fact that the offering was successful is a good sign for the continuation of the sale of the state's interests in other companies", Mr. Rădulescu said, who added: "The fact that the powerful investors subscribed at the minimum price, should be a lesson for the state when it comes to setting the price range for the next offerings".