The Bucharest Stock Exchange? Just one more small time deal!

The true test for the Romanian stock market is the Romgaz IPO, on which the hopes are pinned to help revive the liquidity and to draw in new investors and issuers. These hopes have been reiterated obsessively by brokers, like in the principle "when you want something, the entire Universe conspires to fulfill your wish". Except that the "Universe" did precisely the opposite, if we look no further than one month later: the rights for Nuclearelectrica fell below the price of the IPO, to say nothing of the failure of the Adeplast IPO.

Under these circumstances, the hopes concerning the turnaround of the market are just lies. Their true hope is just to do another small time deal.

Romgaz is still the biggest producer of natural gas in Romania, so if this company doesn't wake up the stock market, nothing will.

The Romgaz offer was launched in a great rush: the price interval was approved on Friday in the government meeting (24-32 lei/share), the prospectus was approved on Friday night by the ASF and posted over the weekend, and the subscriptions have begun yesterday, without an official launch in a press conference, as was customary. To be honest, the delegated minister for Energy Constantin Niţă had more important things to do, namely to show himself off in the United States, together with the Prime Minister at meetings with companies in the sector.

That's alright, because Goldman Sachs is working for us. It's not for nothing that the state has lowered its demands to just 312 million Euros for 15% of Romgaz, from 600 million Euros this summer.

The small investors have gotten to work starting yesterday, even though they are still receiving a discount compared to the institutional investors in the first five days of the IPO.

However, the deal is only applicable for the first 10,000 shares subscribed, not for the GDRs (global depository receipts) which will be listed in London.

At the end of the day, on the small tranche, 1,256.147 shares of Romgaz had been subscribed (14.5%) of which 8,672,004 shares put up for sale on that segment, according to the brokerage firms.

For 1,132,589 of those shares, a discount will apply, whereas for the rest of them, there will be no discount, because they do not exceed the 10,000 shares cap per investor.

According to some market sources, the banks have prepared for this IPO lending products, guaranteed with the stock portfolios.

The Romgaz IPO will end on October 31st, and the shares will be sold on the Bucharest Stock Exchange, as well as through Global Depository Receipts (GDRs) on the London Market.

Brokers consider that small investors have begun liquidating some of the shares in their portfolios since Friday to get cash, which would be used to subscribe in the IPO of Romgaz early on.

• Brokers: "Romgaz will outshine all of the other companies"

The interest in Romgaz caused the price of the allocation rights of Nuclearelectrica (SNNR01) to fall below 11.2 lei/share, the price at which they were sold on the tiers of the institutional investors (85% of the IPO) and of the major retail investors (5% of the deeds in the IPO), brokers consider.

According to Andrei Rădulescu, Senior Investment Analyst at SSIF Broker, Romgaz has every chance of outshining most of the companies listed on the BSE. He told us: "Investors are showing increased interest in Romgaz, far more than was the case of Nuclearelectrica. What is really important is what will happen to Romgaz after the listing. If the price of the shares will be low, there will be massive selling of shares, which will still be felt to the detriment of Nuclearelectrica. I believe that there is a great chance of Romgaz outshining the other utilities companies listed on the Bucharest Stock Exchange".

Mihai Mureşian, head of trading at Intercapital Invest, considers that the price of the Nuclearelectrica rights will remain below 11.2 lei/share, at least for a few sessions. He told us: "Investors are currently trying to come up with money for Romgaz. I estimate that the price for the allocation rights of Nuclearelectrica will continue to drop for a few sessions. Its going back above 11.2 lei/share is not out of the question, but it is a matter of time".

After two down sessions, yesterday, the SNNR01 rights gained 1.2%, but remained below 11.2 lei/share, and closed the session at 10.99 lei/share. Yesterday, 212 trades with 83,889 Nuclearelectrica rights were made, with a total turnover of 919,817.13 lei.