IT equipment retailer and dealer Flamingo will start the necessary procedures next week in view of listing on the Bucharest Stock Exchange through an initial public offering that can reach as much as over 10 million euros, sources on the capital market say.
The price at which the company is selling its shares will be set at the end of the offering, depending on the demand for subscription.
Setting the offering price depending on demand is a first time for the Romanian market, and is similar to the method chosen by Google, the company that manages the namesake Internet search engine for its floatation on the NASDAQ last year.
Flamingo will put up for sale 17 million new shares with a par value of 1,000 ROL. The shares offered to the Stock Exchange investors account for 20% of the share capital that will be reached in case the whole offering is subscribed.
The offering is to be brokered by a syndicate comprising ING Securities and Raiffeisen Capital & Investment, the securities firms of ING Bank and of Raiffeisen Bank respectively and should be started on June 15 and ended on June 22. The official announcement about the start of the offering is to be made this week.
Flamingo officials did not care to comment on this information. The regulations of the National Securities Commission (CNVM) do not allow the company to advertise the offering before its final prospectus has secured CNVM''s approval.
The two brokerage companies that will take care of the offering have already put together a preliminary prospectus they took to several potential investors last week.
The investors that will subscribe during the offering will state the maximum price they are willing to pay. The shares will be then distributed to the highest bidders, and they would get them at a price equal or lower than what they offered.
"In case the number of shares subscribed is lower than the number of shares offered (...) the orders for subscription will be sorted by price from the highest to the lowest offered, with the final price to be set by the issuer (...) with the purpose of securing an oversubscription deemed as satisfactory to facilitate the increase in the price and in the liquidity on the secondary market," the preliminary prospectus of the offering reads.
The company has already secured the in-principle approval for listing on the Bucharest Stock Exchange. The preliminary prospectus specifies that the formalities related to the listing will normally take 30 days to complete from the conclusion of the offering.
Flamingo''s projects for the next few years entail development of the retail and distribution business on the Romanian market and expansion to Serbia, Bulgaria and Croatia. Expansion entails investments of approximately 25 million euros, part of which will be raised from the Stock Exchange.
Flamingo''s listing is the second initial public offering run this year after that of paper and cardboard maker Vrancart Adjud. A similar offering was put out by SSIF Broker from Cluj Napoca at the end of last year. Vrancart raised 4.8 million euros and Broker raised 2.3 million euros.
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