A 3.59% stake in Gazprom PJSC was sold at a multimillion-dollar discount to a single unidentified bidder.
The deal allows Gazprom to capitalise on the surge in its stock price this year by converting shares of the parent company held by subsidiaries into cash, albeit at a significant discount to the $3.3bn market value of the holding. The state-controlled energy producer raised $2.2bn in July through a similar transaction.
“One major bid has been satisfied,” which represented around 79% of the total demand for the stake, Gazprom’s deputy chief executive officer Famil Sadygov said in a statement yesterday. “When taking a decision on distributing the shares among investors, preference has been given to major institutional investors focused on long-term investments,” according the statement, which didn’t give further details.
Gazprom’s Russian distribution unit sold 850.6mn common shares in its parent company at 220.72 roubles apiece in an all-or-nothing deal. This represents an 11% discount to Wednesday’s closing price, and a 13% discount to Thursday’s, when bids were collected. That’s equivalent to a price reduction of about $360mn and $450mn respectively.
The Russian gas producer considers the price of the deal attractive, Sadygov said. “The format of the deal avoided the price correction typical for standard secondary offering,” he said.
Following the deal, Gazprom’s free float – the volume of publicly available shares – increased to 49.61%, according to the company.
Gazprom, which for years disgruntled some investors with a modest dividend yield and massive spending commitments, turned its fortunes around this year with executive reshuffles and plans for more generous shareholder payouts. The recent rally in its share price made the idea of selling stakes in the parent company owned by subsidiaries “most timely,” chief executive officer Alexey Miller said in June.
Offering discounts to buyers of large stakes is common practice, Andrey Polischuk, a Moscow-based analyst for Raiffeisenbank, said by phone. “Otherwise it’s difficult to attract new big investors” who also have the option of buying a stake in the market, he said.
In July, international units of Gazprom sold a 2.9% stake in the gas producer to a single bidder at a discount of 5.4%, or between $120mn and $200mn. A small group of Russian investors, including a business linked to President Vladimir Putin’s friend and longtime Gazprom contractor Arkady Rotenberg, bought it, according to people familiar with the deal. There was no official confirmation of the buyer’s identity.
Due to a lack of transparency in the July sale, the market was less interested in the shares this time, according to Mitch Jennings, oil and gas analyst at Sova Capital in Moscow. “There was an assumption that the market would not get allocations,” he said by e-mail. Gazprom’s stock has gained about 63% this year, compared to a nearly 24% increase for the benchmark MOEX Russia Index.
The company’s shares yesterday erased the gains of the previous day, trading at 251.2 roubles, down 1.24%, in Moscow.
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