Saipem Counting the Cost of Going Solo in Low Oil Price World

Reuters

MILAN, Feb 12 (Reuters) – A plunge in oil prices and little sign of recovery anytime soon have left Italian oil contractor Saipem ill-prepared to cope with life independent from former parent Eni, even after a 3.5 billion euro ($4 billion) fundraising.

The much-needed money is essentially in the bank, as the share sale to existing investors is underwritten by a financial consortium and core investors Eni and state fund FSI.

Saipem said on Thursday shareholders had signed up to 87.8 percent of the offering, worth 3.073 billion euros, leaving the underwriters including the consortium of Goldman Sachs, JP Morgan taking potentially unwanted stock.

However, some analysts had feared worse. "We think a 12.2 percent unsubscribed ratio can be considered a success," said Guglielmo Opipari of broker ICBPI.

Saipem shares on Friday opened higher, but then fell back to hit a new near 20-year low.

Some analysts say the plunge in the stock is a sign that, even with new funds, investors are sceptical it can thrive on its own in a struggling oil industry.

"Saipem was separated from Eni before its time... it's unprepared for independence," said Bernstein oil analyst Nicholas Green, who has an underperform rating on Saipem shares.


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