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(Bloomberg) — Naturgy Energy Group SA shares slid on Tuesday after it sold a combined 5.5% stake through two deals, in an effort to boost liquidity in the stock and enable index inclusion.
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The Spanish utility sold about 19.3 million treasury shares to investors at €25.90 per share, a 7.2% discount to Monday’s closing price, according to terms seen by Bloomberg. The offering is set to raise about €500 million ($578 million), with proceeds earmarked for general corporate purposes.
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Naturgy has been looking to boost its free float and liquidity in order to return to MSCI indexes, after it was removed in February 2024. Inclusion in such gauges helps companies attract more interest from index-tracking funds.
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There was enough investor demand to cover the offering size multiple times over, the terms showed. Morgan Stanley arranged the deal.
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Naturgy shares fell as much as 8.2% to €25.62 apiece, dropping below the €25.90 per share offer price.
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Meanwhile, Naturgy said it would enter a total return swap with an undisclosed financial institution and will sell as many as 34.1 million more treasury shares bilaterally as part of the agreement. A total return swap is a type of derivative where a holder of an asset agrees to pay an investor all of the returns on that asset, in exchange for an agreed interest payout.
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Together, the two deals will boost Naturgy’s free-float to 15.1%, paving the way for its inclusion into stock indexes.
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It’s the latest energy company to tap equity markets in recent weeks. Iberdrola SA raised about €5 billion last month to invest into its power networks and fuel its expansion in the UK and US.
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—With assistance from Henry Ren and Clara Hernanz Lizarraga.
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(Updates with share moves and pricing throughout, and adds additional context in the third paragraph.)
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