Page 11 - FSUOGM Week 32 2019

FSUOGM INVESTMENT FSUOGM
Gazprom mulls SPO for another 3.7% in autumn 2019
RUSSIA
The company is cashing in on a rally in its share price.
RUSSIA’S natural gas giant and pipeline exports monopolist Gazprom could SPO an additional 3.7% of its quasi-treasury shares in the next few months to cash in again on a dramatic rally in the company’s share price in July a er it doubled its dividend payout, Bloomberg reported citing unnamed sources. e stake, which reportedly will be sold to foreign investors through local brokers, would be worth RUB200bn ($3bn) at current valuations.
As reported by bne IntelliNews, in July Gaz- prom sold a quasi-treasury stake of 2.93% in a surprise SPO for RUB139bn, cashing in on the recent rally of its shares and record-high capital- isation. Almost half of the o ering went to one unnamed investor.
One of the buyers of the rst SPO was stoli- garch Arcady Rotenberg, one of the largest recip- ients of state construction and infrastructure objects, according to Bloomberg. However, rep- resentatives of Rotenberg denied the accusation, Vedomosti reports.
Analysts surveyed by Vedomosti believe that the next SPO of the quasi-treasury shares
will also be o ered to a narrow pool of inves- tors. Despite the overhang risks usually associ- ated with sales of additional shares, the market could again react positively to the SPO news and expect Gazprom to please new investors, possi- bly through even more dividends hikes.
“Traders and other market participants believed that an exclusive group of investors intending to buy out the [quasi-treasury] stake has some exclusive information [on Gazprom] and intends to monetise it. is is why the mar- ket switched to buy,” an unnamed trader told Vedomosti back in July.
“None of the sane investors or investor groups would buy such a large stake without a clear per- spectiveofre-sellingitwithapro tinthefuture,” another source said.
Prior to the rst SPO, Gazprom’s subsidiar- ies owned 6.64% of shares in the mother com- pany. Previously the head of the company, Alexei Miller, told the press that various market mech- anisms of monetising the treasury stake were being considered, thus more similar SPOs are not excluded. ™
POLICY
Naftogaz disputes gas price decree in court
UKRAINE
The decree was
issued ahead of snap parliamentary elections.
UKRAINE’S state gas supplier Naftogaz has launched legal proceedings to try to overturn a recent government resolution requiring it to reduce its gas prices.
A decree passed in June requires Na ogaz to set its residential tari s to match the lowest among either import prices, those at the Ukrain- ian Energy Exchange (UEEX), those for prepaid industrial supplies or those under public service obligations. e result has been a steady decline in household gas prices, which are set to fall by a further 5.1% in August to $184 per 1,000 cubic metres, excluding VAT and transport costs.
Na ogaz has led a lawsuit at the Kyiv district administrative court seeking to repeal the legis- lation, however, the court’s press service revealed on August 9.
Household gas sales are a major drag on Naf- togaz’s nancial performance, with the company booking a UAH2.9bn ($120mn) loss from the segment in 2018. In contrast, its sales to indus- trial consumers at unregulated tari s earned it a UAH8bn ($319mn) pro t that year.
Gas prices were a key talking point in the run-up to Ukraine’s presidential elections ear- lier this year, in which President Volodymyr Zelensky secured a landslide victory. e decree adjusting how gas prices are calculated allowed Zelensky to announce a hefty 11.7% cut in household tari s for July, helping him shore up support for snap parliamentary elections that took place on July 21. His Servant of the Peo- ple party won 254 out of 424 seats at the ballot, while the party with the second highest number of seats, Opposition Platform – For Life, secured only 43.
Na ogaz’s nancial position is also at risk from the expiry of its long-term contract to transit Russian gas at the end of this year, which earned it UAH36.5bn ($1.45bn) in net pro ts in 2018. Transit is very likely to continue, although Gazprom aims to divert up to 55bn cubic metres of annual volumes to its Nord Stream 2 pipeline, due online in early 2020. In the longer term, Naf- togaz’s pipelines are scheduled to be transferred to an newly formed independent operator. ™
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