OMV Share: 30 years on the stock exchange – 2,000 percent ROI

It was 30 years ago, on 3 December 1987, that the OMV share took its first breath on the stock market. And that at a princely price of 4,400 Schilling. Later we will look at how it has performed since then, but first, let’s hear from a few eye witnesses.

Bucking Black Monday

The backdrop was anything but promising. Just two months or so before OMV’s planned IPO, “Black Monday” led forecasts to plummet. This was the day that the Dow Jones in New York fell by more than 22 percent and the Vienna Stock Exchange was also unable to emerged unscathed, even if its decline of 13.4 percent by the end of October seemed relatively mild. In light of this uncertainty, several privatizations that had been planned in various countries were put on hold. Multiple IPOs fell far short of expectations, while others were cancelled completely. And the initial listing of OMV was also in danger of being called off or delayed.

As it turned out, those responsible played their cards right when on 12 November they decided after all to place 300,000 OMV shares at an issue price of 4,400 Schilling on the Vienna Stock Exchange. While this represented fewer shares than originally planned, it was still by far the largest transaction in Austria with a value of around 1.3 billion Schilling.

And that’s how, on 3 December 1987, the first OMV price of 4,400 Schilling was recorded on the Vienna Stock Exchange. “At the time it was still written in chalk on a blackboard”, grins Franz Kubik today. As the head of the project for the lead bank, Creditanstalt-Bankverein, he followed it all live. The closing price that day ended up climbing to 4,450 Schilling, a perfectly satisfactory result given the circumstances. Almost a week later, on 9 December 1987, the OMV share was also launched on the Frankfurt and Munich stock exchanges.

It wasn’t just that this was the first major Austrian IPO that I had the chance to accompany – it was unchartered territory for all of us. After all, this was the first privatization in Austria.
Franz Kubik, Former project head for the lead bank, Creditanstalt-Bankverein

The perfect bride

But the actual project had started months before. Wolfgang Baumann, then a legal consultant for OMV, looks back on how it all began: “The CFO at the time, Ms. Schaumayer, phoned me one morning and said: There’s no one else from the legal department around at the moment, would you come to my office please.”

That’s when a team was put together to fulfill the goal of ÖIAG, the sole shareholder at that time, to privatize OMV (then still ÖMV) and sell some of their shares in OMV on the stock exchange. This news hardly came as a surprise – the political decision to privatize various Austrian companies had already been made in early 1987 while forming the new government.

Now the task was to “bring OMV to the investors”. What followed was painstaking project work: Legal opinions were gathered, marketing measures developed, stock exchanges defined, press conferences and road shows organized, and technical details negotiated. “It wasn’t just that this was the first major Austrian IPO that I had the chance to accompany – it was unchartered territory for all of us. After all, this was the first privatization in Austria. We were able to draw on examples from Great Britain and France, but a lot of the frame conditions were very flexible and that was what made it so exciting,” explained Franz Kubik.

“Now you can finally become an OMV shareholder”

It soon became obvious that in Austria they wanted to target small shareholders as well as institutional investors. A major advertising campaign was launched with the goal of appealing to investors from Main Street.

Advertisements appeared on the TV, radio and in newspapers, letting everyone, everywhere know that he or she could become an OMV shareholder. There was even a telephone hotline for those with questions. Franz Kubik explains: “The whole of Austria was plastered in OMV posters, there was wall-to-wall advertising.” And it paid off: There was massive interest with the issue dominating not just ÖIAG and OMV, but also the government and the media for weeks. What’s more, half of Austria was discussing what it would mean to be an OMV shareholder – as were the OMV employees themselves. Every employee received subscription options. “There was a brisk trade in these options; employees could swap them among themselves or sell them on and thereby acquire the right to buy shares. This was a preliminary phase before the real share trading began,” explains Wolfgang Baumann.

The subscription period began on 16 November and had to be closed prematurely after just three days due to the huge demand. As Franz Kubik recalls: “There was a run on the shares; something that had never happened before. It was the first privatization in Austria and this was reflected in the strong interest.” Around 30,000 small shareholders signed up for OMV shares at that time – an enormous number for a small country like Austria.

What was special about the initial public offering was genuinely experiencing what a share is and how it comes into being – with all of the stages in between. Being there for an IPO is not something you experience every day. It really was an exciting time.
Wolfgang Baumann, Former legal consultant at OMV Aktiengesellschaft

OMV Share: Success across the board

Overall, the OMV IPO generated sales proceeds of 1.3 billion Schilling for ÖIAG – and therefore for the State of Austria. And this even though only 15 percent was sold rather than the 25 percent that was originally planned, following the stock market crashes related to Black Monday.

While good for Austria, the stock exchange listing of OMV was also not a bad deal for investors: Those who bought OMV shares in 1987 did well. Especially if they kept hold of them until now. After all, the price of the OMV share has increased sixteen-fold since its initial listing 30 years ago. And that’s even before dividends are counted.

A small calculation: The adjusted share value from 30 years ago is around EUR 3.20. Today the OMV share is worth EUR 52.30 (closing December 1, 2017). The profit thereby totals around EUR 49.10. If you’d bought a share back then and kept it all those years, you would have generated additional dividends of EUR 17.08. Together, the share price hike and dividends represent an increase of… how much do you guess? Well, 2,068 percent. Even when you take taxes into account, it’s still a pretty penny. And the OMV share has thereby outperformed the ATX many times over, as you can see in the following graph:

To the next 30 years

And how has OMV itself profited since it joined the stock market? One thing is certain – the company has grown considerably in the past three decades. And it’s not just the OMV share price that has rocketed in the past 30 years; other KPIs have undergone impressive changes. Revenue, assets, market cap and staffing levels have all risen. An interesting side note: The OMV annual report has also expanded significantly. While 60 pages were sufficient 30 years ago, the 2016 Annual Report already ran to a good 232 pages. Hardly surprising, as OMV has a lot to report, given its comprehensive activities.

“ÖMV is profitable, well-managed and has a good international profile”, wrote the Financial Times just before the IPO in September 1987. And it turned out to be right. In this spirit we look forward to the next 30 years of the OMV share.