Naturgy has a general meeting of shareholders after the Easter holidays, on April 2, and arrives at the meeting with investors pending to resolve the capital exit from CVC Capital Partners. The fund led by Javier de Jaime in Spain has increased pressure on the gas company after the collapse of the share value and the impossibility of carrying out the ‘Geminis’ project.
Sector sources assure La Información that news in this regard could occur in the coming days. The departure of CVC is nothing new but the fund would have been planted now, after the gas company’s price has lost a quarter of its stock market value so far in 2024, as this media has published, and given the complication posed by a possible delisting from the stock market. The fund now has to figure out how to exit the company without losing its initial investment and with the benefit of the dividends it has collected over the last six years.
Leaving the park is a very complicated option, which is also not clear if it has the full support of another large institutional shareholder, Criteria Caixa, which controls 26.7%. The investment arm of the La Caixa Foundation is always committed to being in strategic companies – as it also does with Telefónica – that continue to follow the transparency standards and rules of listed companies. CVC is the second shareholder with 20.7%, followed by GIP, with 20.6% now in the hands of BlackRock; while the Australian IFM fund recently climbed up to 15%; and the Algerian Sonatrach has 4.1%. In this way, the working capital remains below minimums with a range that is around 10% and 15%, very low by market standards.
Shareholders with little space and that reduces attractiveness
This part is precisely what complicates CVC plans. Naturgy has a very large shareholding and little space, which makes it less attractive for the rest of the international funds and institutional investors. In addition, we must add the recent expulsion of MSCI Spain from the company, one of the world’s benchmarks, due to the lack of liquidity as a consequence, among other issues, of the reduced ‘free-float’.
Under this scenario, the sources consulted in the market assure that stopping trading would make perfect sense for Naturgy, to stop being penalized. The gas company of Catalan origin closed this Tuesday at 20 euros per share, which gives it a capitalization of about 19.1 billion euros. Since its peak last December, its stock market valuation has been reduced by 8 billion euros. CVC, which has now completed its cycle in the company, bought its stake at 19 euros per share in 2018 and paid out around 3.9 billion euros. The current value, according to yesterday’s closing, is 4,000 million and such an amount is difficult to place on the market while ‘Gemini’ remains frozen.
The sources consulted indicate that naturgy needs a plan to generate value. The third vice president and minister for the Ecological Transition, Teresa Ribera, has openly opposed the project to divide Naturgy into two companies, closing one of the escape routes for CVC. This week it was confirmed that the fund is also studying exit options for its investment in the Alfonso X El Sabio University, including the sale of its stake.
The idea of dividing the gas company into two parts (Gemini project) was announced in February 2022, just before Russia’s invasion of Ukraine, and its purpose is for one company to keep the liberalized business and the other to remain. . in charge of regulated activities. Reynés continues to believe in it: “It still makes all the strategic sense, but today the circumstances do not exist.”
More dividend to calm spirits
Naturgy updated its strategy last summer with fewer investments and greater shareholder remuneration. It updated its objectives for the period 2021-2025 and investments will decrease by 800 million euros, going from 14,000 to 13,200 million. On the contrary, it will compensate the funds and the rest of the shareholders with more dividends while it finds the opportune moment to relaunch the spin-off.
Unlike CVC, IFM continues to climb positions. The Australian fund already exceeds 15% and market sources assure that it wants more with the aim of achieving its second seat on the board of directors. The fund run by Jaime Siles in Spain is close to achieving the 17% that was set as a goal in the partial takeover bid that it launched in January 2021 – then it reached 10.8%. The Australians have allocated more than 1 billion euros to acquire additional shares operating in the market without making noise.
Criteria Caixa responded to the IFM takeover bid
The IFM takeover bid was in response to Criteria’s decision to strengthen its shareholding, raising its participation with various purchases in 2021 to the current 26.7% and with the aspiration of reaching up to 30% – the maximum allowed by law without having to launch another takeover bid. Naturgy’s board is currently made up of twelve members – the company’s statutes establish a minimum of 11 and a maximum of 15 -, with its president as the only director with the category of executive. The rest of the members of the energy company’s board are independent and proprietary and no movement is expected on April 2 after the re-election of Reynés last year.
The Government is also analyzing the entry of BlackRock into the capital after purchasing GIP and this possible change in the ownership of the participation has already sparked criticism from the partners of the PSOE Executive.
