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Alro's attempt by Alro to sell the majority stake to the aluminum producer failed after the sellers failed to meet the demand in the market at the asking price. The unstable context of national legislation and regulations, the negative market climate where a tariff war was triggered and the weak market sentiment prevented the closure of an offer of a market value that could to reach 300 million. Pension funds made subscriptions of about one-fifth of the offer, but foreigners were not brought in. The investors contacted by Profit.ro put less on the failure of the company and I think the intermediaries have created false expectations for its representatives. "He has a paper clip!", Said one of them
A secondary public offering of a tranche of the IMF could not be absorbed by the Bucharest Stock Exchange , betraying a weakness of the local market, not so much by its ability to catalyze (1969003) The Russians controlling Alro Slatina (ALR) have failed, through Vimetco and Conef, to sell the majority stake of 53.77% , is true in – an unfavorable context for the industry, with a downward trend in aluminum prices in recent months and a US tariff
The climate of volatility of legislation and in the field of regulation induced by the political environment in Romania has fueled the weak sentiment in the market, say institutional and individual investors contacted by Profit.ro. Even in this unfavorable context, however, domestic demand existed.
Romanians made a strong army to support the supply …
According to capital market sources, some of the pension funds, including at least one of the largest, placed firm offers in Alro 's bid, the order of magnitude being several tens of millions of euros
. There was an interest from other local institutional investors. A representative of a financial asset management company decides for Profit.ro, before the prospectus amendment, that he will place an order, but not above the starting point of the secondary market before the anniversary of the market operation, with some fears
If we add to that the 681 orders collected on the retail slice for the purchase of 9.44 million shares – with a value of investments of 37.76 million lei (8.11 million euros) – we see that the internal demand existed and that could support somewhere between a fifth and a third of the offer. The prospectus amendment and the formation of a feeling of weakness prompted local players to play.
Although foreigners did not come
Although Alro appointed the leaders of the consortium of registration, two major players in the international markets, Deutsche Bank and UBS, they failed to provide a supply capital flow to find in the quotes with the claims of the price sellers
Local institutional investors generally view non-residents as very close to reality. Thus, if there are internal mobilisations or approaches influenced by the feeling of belonging to the national market, it is rather the foreigners who give the correct image of the price of certain actions or investment opportunities. . In the case of Alro, the indication was negative. The low participation of foreign capital is the main cause of the failure of the closed market operation last week.
Intermediaries did not bring money to clients. Investors say that they went to the transmitter with "paper clips"
"It's amazing!" Said the local market could not absorb an offer of 200-300 million euros Victor, an investor with more than 20 years of experience at the BSE and shareholder in Alro where he bought a package there is almost two years at a price of 1.20 lei / share, one-third of the minimum price of 3.50 lei / share shown in the amended prospectus. The erroneous exit to the business market is all the more difficult to understand, and in part it has shown very good.
Considering that the sellers created a false image of the application of the representatives of the consortium of registration. "They have trombonite!" Says Victor. "Maybe they said," Let's solve it! "This is not a single perception." An institutional investor states that he has the same view that brokers have misled company representatives as to the possibility of getting the price requested under current market conditions.
Easy with aluminum on the stairs …
is, in fact, unfavorable.At the London Metal Exchange, the three-month futures contracts experience a slowdown in the last three months and the quotation reached $ 2,000 per tonne, as shown in the attached graph that reflects the same trajectory quote
A representative of an investment fund sees an unfavorable context and therefore has a decreasing rate of income for Alro. why he did not participate in the When he saw the price of 6.18 lei / share at maximum, he felt that sellers' expectations were unrealistic and he did not even want to deepen his calculations knowing that he would not subscribe
. An institution tells us that a comparative analysis with other listed companies showed a 40-50% discount on the price at which Alro's majority package was sold. Therefore, initially, he and his colleagues did not think that the offer would not be closed. The stakes on the participation of non-residents, but they did not come, it seems that even the funds specialized in sectoral investments in the metal market
Victor does not consider nor does the fundamental data of the company as reworked. In addition, it seems "screaming in the sky" that they have managed to close the parameters of its less attractive offers of MedLife (M), Digi Communications (DIGI), Sphera Franchise Group (SFG), even Purcari Wineries (WINE ), companies that also announced that they would not give dividends, given Alro 's generous shareholder payments during years of substantial profits. "I'm really sorry these people did not leave their offer."
A "stick" … in London
There is, however, something that falls on the salesmen. One of the reasons why the listed consortium has struggled to find investors in the big markets for Alro is that the Russians holding the combination have a worse history in the international financial markets.
Vimetco (VICO) was listed on the London Stock Exchange in the summer of 2007, in a context of a boom in the metals market and multiplied on the stock markets. It was a $ 524 million market transaction, of which $ 90 million remained for the company. This was a capital destruction for participating investors since the certificates of deposit (GDR) purchased in the offer at $ 9.00 the unit came to the trading l & # 39; 39 last summer, a few days before delisting, to only one-third of the face value, in the $ 0.03 area for a certificate, a decrease of more than 99%. An investor has even described as "stick" what happened to the listing of Vimetco in London
Whatever investors would buy, it was still for sale
On the local market, Alro is a well-known company. Institutional investors do not have the same hold. One of them told Profit.ro that at previous meetings, the company seemed very open to portfolio investors. He also appreciated the professionalism and knowledge of the aluminum market by the management of the company.
Investors were reluctant to say that even if a successful offer were offered, if the Russians were to leave their country, packages available for sale (the phenomenon called "overhang"). The fear was related to the fact that the share price does not offer any upside as long as an offer can intervene in the medium term, possibly with haircut, according to Fondul Proprietatea's model (FP ) in the companies that she wanted to go out
Agonizant … Time has passed and the messages have not come from the brokers
This is a constraint that has existed since the beginning but that has been stimulated by the course of supply. If the first institutional investors were confident, trust has gradually eroded. The lack of messages from intermediaries has increased nervousness. It became clear that there was nothing in the "book". For example, at MedLife, it was reported that the offer was fully covered, that there was some level of oversubscription, that the minimum price level had increased and that the order had to be moved. Here, such indications were missing.
This is the context in which the market The Romanian capital has shown a weakness . What is most discouraging for gamblers is that it happens when credit increases, wages rise, consumption is robust
One of the arguments was that Alro's bid was too high, but Victor does not agree that a level of 200-300 million euros is a very high threshold: "How much money has been spent in Romania, this n & # 39; 39, was not an amount that can not be collected … "
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