The Portuguese government is hoping to raise 1.1 billion euros from the sale of 23% of oil company Galp Energia. Investor demand was strong and the shares rose when they first went on sale, but traders predicted that would not last as they said the price had been set too high.
Portugal’s Finance Minister, Manuel Teixeira dos Santos, said: “The initial public offering of shares was very positively received by the market. The figures reveal the interest that the market has in investing in a company like Galp Energia. Indeed, the fact that the offering was 20 times oversubscribed demonstrates the level of interest.”
With the sell off, Portugal’s government has reduced its holding from 30% to 7%. The biggest single shareholder is Italy’s ENI with a third of the shares. A Portuguese investment partnership called Amorim Energia holds 31.6%. Spanish power company Iberdrola has 4%. ENI and Amorim have promised not to sell their shares before the end of 2010.
Galp Energia, which is Portugal’s only oil firm, is now the country’s fifth biggest listed company by market capitalisation. It has refining and distribution operations in Spain as well as in Portugal and is involved in oil exploration partnerships in Brazil and Angola.
The Portuguese government said it will use the money raised from the share sale to cut debt and invest in other state-owned companies.