Romanian oil and gas group OMV Petrom (BSE ticker: SNP) will leave the London Stock Exchange at the end of October due to the low liquidity of its Global Depository Receipts (GDRs). The group’s shares will continue to trade on the Bucharest Stock Exchange.

OMV Petrom is the first Romanian company that exits the London Stock Exchange. The company has explained its decision saying that international investors are now more interested in buying its shares on the Bucharest Stock Exchange than the GDRs traded in London.

Three other Romanian issuers have GDRs listed on the London Stock Exchange: gas producer Romgaz (SNG), electricity distributor Electrica (EL) and investment fund Fondul Proprietatea (FP).

In April, OMV Petrom’s shareholders approved the delisting of the group’s GDRs from the London Stock Exchange and the decision will become effective on October 26, 2023.

“Following such resolution of the EGMS and the decision of the Executive Board of the Company of 23 August 2023 approving, amongst other things, the details of the Delisting, the Company announces today the commencement of the process for the GDRs representing interests in the Company's ordinary shares to be removed from the Official List of the Financial Conduct Authority and the trading of the GDRs on the Main Market of the London Stock Exchange to be cancelled,” OMV Petrom has announced.

OMV Petrom’s GDRs were admitted to trading on the London Stock Exchange one October 20, 2016. At that time, the company chose the listing on the London Stock Exchange to gain access to a larger investor base, due to the low level of liquidity and accessibility limitations on the Bucharest Stock Exchange.

Since then, the group has seen a steep reduction to the number of GDRs in issue to around 5% of the initial volume at the time of listing, reflecting a low level of investors’ interest in the GDRs, especially since 2019, corroborated with an increase in investors’ interest in the Bucharest Stock Exchange.

As compared to 2018, the traded value of the GDRs decreased by 97% in 2022 to USD 0.3 million and an average of USD 1,250 per day. As of July 31, 2023, the GDRs accounted for only 0.03% in the company's share capital with the total capitalization of the GDRs only representing USD 2.3 million.

“The Bucharest Stock Exchange's development over the years, the inclusion of the Company in the FTSE Russell EM indices and the market-making services contracted by the Company since September 2021 have made the shares traded on the Bucharest Stock Exchange more attractive, from liquidity perspective, than the GDRs traded on the London Stock Exchange,” OMV Petrom has argued.

“Against this background and considering also the ongoing regulatory compliance and administrative costs the Company incurs as a result of its London listing, the Company does not see a relevant benefit of maintaining this listing. Consequently, the Company is now seeking the cancellation of the listing of its GDRs on the Official List and of their trading on the Main Market.”

OMV Petrom is the second-biggest company traded on the Bucharest Stock Exchange, with a market capitalization of RON 32.5 bln (EUR 6.6 bln). In the last 12 months, OMV Petrom has also been the most traded company on the Bucharest Stock Exchange, with a turnover of RON 2.5 bln (EUR 510 mln), according to BSE data.

editor@romania-insider.com

(Photo source: company photo)