Fondul Proprietatea expects the listing of at least 15% of Hidroelectrica’s shares on the stock exchange to generate major investor interest and lead to a 2-3 billion dollars transaction. The condition is that the initial public offering (IPO) be a dual listing, the Bucharest Stock Exchange and the London Stock Exchange.

The Romanian Government has undertaken through the National Resilience and Recovery Plan (NRRP) to complete the listing of Hidroelectrica by 30 June 2023. As early as 2020, Hidroelectrica has finalized the selection of the legal advisor (Dentons) and the equity advisor (STJ) for the initial public offering (IPO). Preparing for an IPO is however a relatively complicated and lengthy process, which could take at least 6-9 months, estimates representatives of the Fondul Proprietatea.

Fondul Proprietatea (FP) officials have announced that they are prepared to convene an Extraordinary General Meeting of Shareholders (EGMS) as soon as possible to seek shareholder approval for an initial public offering based on shares held by the Fund. At the same time, “given the FP’s commitment to conduct the IPO with its own shares, Hidroelectrica should immediately start preparing to become a listed public company (legal due diligence activities, updating the business plan/equity story, preparing financial and non-financial reporting, assuming ESG commitments, etc)”.

According to the Fondul Proprietatea, “the listing of Hidroelectrica would represent the largest IPO of a Romanian company ever made, surpassing Electrica’s IPO several times in value and potentially exceeding by more than 10 times the value of the highest IPO made exclusively on the BVB (Digi Communications)”. From this perspective, Hidroelectrica’s listing will be a big one even at the European level.

For a successful IPO, says FP, “gross demand represented by the aggregate value of orders placed by investors in an IPO is required to be between 2 and 3 times the actual size of the IPO (allocated demand)”. In the case of Hidroelectrica, “this means that it is necessary to generate gross investor demand for Hidroelectrica shares of more than $6 billion”, which cannot be attracted from the Bucharest stock market alone. FP officials cited 12 other arguments in favour of the dual listing, from perspectives such as investor access, the free-float level, the failure risks, the benefits of a much wider exposure for the company and Romania, and the potential impact on the BVB’s emerging market status.