FRPP sells Romanian private natural gas distributor

Reghev & Instal (VitalGaz), the main private distributor of natural gas in Romania, is about to be sold by its main shareholder – Fondul Roman Post Privatizare (Romanian Post Privatisation Fund – FRPP) to a group comprising the largest Israeli companies in the field: Solor-Chromagen and Supergaz.

The transaction is estimated at seven-eight million euros, meaning that the Romanian Post Privatisation Fund, which came to own 73 percent of Vitalgaz following an investment totalling 3.7 million euros, can derive a 100% yield in less than two years.

“Negotiations have reached a very advanced stage, with the final bid to be made by the Israeli consortium in a matter of days. The final stage of the due-dilligence process is being conducted by a Romanian company,” according to sources close to negotiations.

VitalGaz became attractive due to the spectacular development it has posted over the past two years and to the gradual liberalisation of the Romanian gas distribution market.

As a matter of fact, the idea to sell the company to a strategic investor stemmed from the potential strong growth of VitalGaz distribution network, which had not been foreseen when the Romanian Post Privatisation Fund entered the deal (April 2000)

VitalGaz, originally named Reghev&Instal, was initially aimed at the development of a distribution network for natural gas spreading over 200 kilometres around Bucharest.

After attaining the initial target and successfully claiming the supply of 15,400 households in the Bran-Videle areas and in Ilfov County, VitalGaz is now planning to launch a powerful expansion.

Consequently, if VitalGaz wins the lease tenders aimed at Zalau and Satu-Mare counties, this will boost its activity more than six times.

“The investments needed from the Romanian Post Privatisation Fund in order to support such a strong growth can amount to several million dollars. Moreover, this kind of expansion must be backed by companies that have been operating for a long time in this field,” the above-quoted sources maintain.