July 26, 2019 / 11:38 AM / 22 days ago

UPDATE 2-Russia's Gazprom sells discounted 2.9% stake to one bidder, raises $2.2 bln

* Gazprom offered 2.9% stake in one-day share offering

* Set price of 200.5 rbls/share, below market

* Raises $2.2 bln in two transactions

* Gazprom says there was one buyer (Adds details, background)

By Olga Popova and Katya Golubkova

MOSCOW, July 26 (Reuters) - Russia’s Gazprom, the world’s largest conventional gas producer, has raised about $2.20 billion from selling a 2.9% stake to a single buyer at a large discount to the market price.

The sale of the shares, offered by subsidiaries Gazprom Gerosgaz Holdings BV and Rosingaz Ltd, was initially welcomed by investors who were looking to buy into the company after major management changes and a pledge of higher dividends earlier this year.

Moscow Exchange data showed the sale was split into two almost equal sized transactions. Gazprom CFO Famil Sadygov said on Friday that the shares had been sold to one buyer, whose bid covered 70% of the overall demand.

The company had set a price of 200.5 roubles ($3.18) per share for the deal, a 5% discount to Wednesday’s closing price, with the transactions taking place on Thursday.

“A reasonable price… but far below what we think the stock is worth,” Citibank analyst Ronald Smith said in a note. “We see Gazprom as being worth approximately 50% more than the current price.”

Smith also said that it was not clear why Gazprom, controlled by the Russian state, was conducting the offering now, as the company had around $28 billion of cash and near cash equivalents on its balance sheet at the end of the first quarter of this year.

“Given the amount of the deal, it could be assumed that this was a large buyer who does not plan to sell the stake immediately,” Promsvyazbank analysts said in a note.

DISCOUNT

Gazprom said on Thursday that the two subsidiaries would offer a combined stake of 693.6 million ordinary Gazprom shares, or just under 3%.

The gas producer received 494 bids, totalling 198.89 billion roubles, which supported the shares during Thursday’s trading session but left some investors disappointed by the final low price.

“People were submitting higher bids, to get a bigger stake. But this did not happen. There was no market deal,” a portfolio manager with a large Russian asset management company said.

“(It seems) the task was to sell as cheaply as possible.”

A trader from another Russian asset management company said that he believed 200 roubles to be “a very big discount” to Gazprom’s fair price.

Gazprom said its free share float would rise to 46.02% after the stake sale.

Earlier this year, Gazprom replaced key executives and promised to boost its dividend payout to 50% of net profits, spurring a rally in its shares to their highest since mid-2008.

Gazprom shares were up 5.8% by 1128 GMT on Friday at 231.70 roubles. Gazprombank, of which Gazprom is a shareholder, was the sole bookrunner for the stake sale. (Reporting by Anna Pruchnicka in GDYNIA, Maria Kiselyova, Maria Grabar, Olga Popova and Elena Fabrichnaya in MOSCOW; Writing by Katya Golubkova Editing by Kirsten Donovan)

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