will list its subsidiary on the US stock exchange


Eduardo Segovia

  • Eduardo Segovia
  • Banking and business correspondent. Doctor and Master of Economic Information. He came through El Confidencial and directed Bolsamanía. Author of the book “From the Bourbons to the Botins.”

Repsol will follow the steps Ferrovial and is about to take it out Bag its subsidiary exploration and production (upstream in oil jargon) in USA and not in Spain. The main reason for this decision is that in Europe, including Spain, this activity is condemned or prohibited, so markets do not value it, while in the United States the opposite is true.

As you know, a family-owned construction company From pine last year decided to go public in the United States and, to facilitate this operation, moved its headquarters to Netherlandswhich led to harsh criticism and threats from the government Pedro Sanchez. In the case of Repsol, the company is not considering moving its headquarters outside of Spain like Ferrovial, but it is likely that the subsidiary will be headquartered in the North American country to facilitate operations. It has the advantage of being home to the American EIG in its capital. In any case, what is clear is that he intends to ignore the Spanish stock market in this operation.

This was announced yesterday by the CEO of the oil company Joshua John Imazin the presentation of the results of 2023 and the new strategic plan: “We have an agreement with EIG which is considering listing the company as we improve our business exploration and production. Our intention is to list this company V Anglo-Saxon marketpreferably in the USA.

“Why should this be done there and not in Europe? This business does not exist in Europe, it is undesirable and prohibited in many countries. Therefore, the market here is not value. So we will have to do it in the Anglo-Saxon market, where multiples “They are completely different,” Imaz added, recalling that the only activities the unit has in Europe are outside the EU: specifically in Norway and the UK.

Repsol plays a lot

Repsol had a lot of money at stake in this operation. The aforementioned EIG, an American institutional investor specializing in energybought 25% of this Repsol division in September 2022 at a price of $4.8 billion, implying a valuation of 100% at price $19.2 billion (about 17.7 billion euros). A very important figure, given that Repsol’s total capitalization today is almost the same: 18.370 million euros. In other words: the subsidiary alone is worth almost as much as the entire company.

Consequently, the Spanish company is very interested in obtaining the highest possible valuation for the placement of shares of this subsidiary, which it believes it can only achieve in the United States. There, oil production is in full swing under the government of an environmental theorist Joe Bidenespecially thanks hydraulic fracturing. This allowed him to surpass Saudi Arabia as the world’s leading producer of crude oil.

The share of the exploration and production business that will be listed on the stock market has not yet been determined. But apart from the income that Repsol receives from the sale of this stake, the important thing is that it will be able to value the subsidiary on its books at the price it will achieve at the IPO (what is called put on the market). And how is yours value of the book the current one is very low because it is a business created by the company itself and not acquired, it will receive a strong capital gain which can lead to advantages and use for rewards shareholderor use it to make new investments or acquisitions.

The Ferrovial Case

In the case of Ferrovial, the company intends to enter the market. Nasdaq as a pure North American security, rather than as a certificate of deposit (ADR), as Spanish companies are typically listed in the United States. In this way, the company will be able to attract new investors to this country, enter its stock indexes and achieve a higher valuation than what it currently has in Spain. She takes advantage of the fact that she has a lot of business in this country and is therefore quite famous.

Likewise, it concluded that this goal was easier to achieve by moving its headquarters to the Netherlands because its regulation is more flexible and has fewer bureaucratic obstacles than in Spain. Something she herself admitted CNMV (National Stock Market Commission).

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