Romgaz’s share return saved by dividends in the 5 years since the IPO

Aurel Dragan 14/11/2018 | 10:32

Romgaz became a public company after listing on Bucharest Stock Exchange (BVB) 5 years ago. The listing was a success and after 5 years of trading is has given a very good return to the investors. But it was not the evolution of the share price that headed the return, with only 17 percent increase compared to the moment of listing, but the dividends, which amounted 64 percent. 

The share price was in the red until a year ago and if a major downward trend would hit the market, the Romgaz price would probably go down as well. But the company is one of the biggest in Romania and it closes every year with a huge profit, which means that the dividends would still flow. Especially if the state, the main shareholder, will take the money out of the company reserves every time it has to cover holes in the state budget.

This year Romgaz will give out an additional RON 717 million in dividends, as the state wants to take RON 501 million out of the company. The only people in Romania who are happy about this move are the small shareholders, who will get a part of the dividends along with the state.

The largest IPO

The listing of Romgaz (SNG), the largest natural gas producer and the main gas supplier in Romania, was one of the largest equity sales the Romanian state performed on the BVB.

SNG shares started trading on the Main Market of BVB on November 12, 2013, following a successful offering worth a total of RON 1.7 billion, made both on BVB and London Stock Exchange. For Romania, it was the largest sale at that time of a state-owned company using the stock exchange, and it became the second largest ever a year later, when Electrica was sold for a larger amount.

“Romgaz’s listing on the Bucharest Stock Exchange and the London Stock Exchange was an important moment in the company’s history. Through the listing, the degree of transparency and communication has increased as far as the relationship with investors, the business environment and the public in Romania and abroad are concerned. Romgaz has fully assumed the responsibilities of being a listed the company, which includes reporting and communicating important business events to the stock exchanges. Also, the listing process brings additional benefits to the brand’s image. Institutional and individual investors, the media in general, the business environment, they all closely follow the company’s evolution and contribute favorably to increasing the reputation, promotion and development of our business,” said Adrian Volintiru, General Manager at Romgaz.

Five years after the listing, the price share surged by 17 percent, while the dividend yield amounted to 64 percent.

“Romgaz is the company with the largest weight in several BVB indices among the mainly state-owned listed companies and represents an important investment anchor for institutional investors, such as investment funds or pension funds. Romgaz sets an example of success for other state-owned companies that could be listed on the Romanian stock exchange. Resuming the process of listing state companies means transparency, and transparency on the stock exchange translates into money. The company’s shareholders will then be able to benefit from the listing process, including potential increases in share price and receiving dividends,” BVB CEO Adrian Tanase stated.

Among the higest daily traded companies

In 2013, the Romanian state, the majority shareholder of SNG, sold 15 percent of the company’s equity. The offer included the sale of up to  57,813,360 shares issued by the company, as shares and global depositary receipts (GDR). The sale price was RON 30 per share and USD 9.25 dollars per GDR, which made the total value of the offer amount to RON 1.7 billion.

“Romgaz is one of the largest and most traded issuers on BVB. In the first ten months this year, the transaction value of shares was worth RON 850 million. Romgaz is one of the largest listed companies in Romania that has attracted and will attract significant investments from world-class institutional investors, which will help Romania’s capital market to move closer to the strategic goal of promoting to the Emerging Market status. The more outstanding performing companies we have on the stock exchange, the more Romania will benefit from the increase of investments and new jobs, and all this will translate into well-being for the Romanians,” said Lucian Anghel, President of the Board of Governors of BVB.

“The listing on the capital market incentivizes us to perform. At the moment, we have several directions. First of all, we will continue to invest in onshore exploitation, we focus on replacing the gas reserves with new ones. We want to invest in petrochemicals and obviously in strengthening our position in the energy trading markets. In the electricity production field, Romgaz has decided to go for a more efficient approach regarding the Iernut Thermoelectric Plant, meet the environmental requirements and increase safety in exploitation,” said Adrian Volintiru, General Manager of Romgaz.

The value of dividends given by SNG to its shareholders was RON 7.4 billion for the period 2013-2017. The largest shareholder of the SNG, with a 70 percent stake in shares, is the Romanian state through the Ministry of Energy.

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