Acasă » Profiles » Companii » Hidroelectrica to be listed on BVB in July, FP may sell its entire package of around 20% also in London

Hidroelectrica to be listed on BVB in July, FP may sell its entire package of around 20% also in London

7 June 2023
Bogdan Tudorache

The largest IPO on the Bucharest Stock Exchange (BVB) may take place in July, according to the official Hidroelectrica listing announcement sent by the company to investors and the media on Tuesday. The press release does not specify anything about the possibility of a dual listing, however, according to a Fondul Proprietatea (FP) document issued last year consulted by Energynomics, “to ensure the success of the IPO, the listing of Hidroelectrica needs to take place both on the BVB, as the main market , as well as on an international capital market (for example the London Stock Exchange, LSE).”

“There is a large gap between the local capital markets in the Central-Eastern Europe region and established financial centers in terms of available funds and liquidity… Even by European and international standards, the Hidroelectrica IPO would represent a very large transaction. Given that the size of the transaction is expected to exceed 2 billion Euros, banks would be very concerned about the risk of the transaction if the listing were to take place only on the BVB…The placement is expected to be much larger compared to what what the local market can absorb: USD 2.5-3.0 billion. Without a dual listing, the company’s IPO could fail,” said the FP document consulted by Energynomics.

“For a successful IPO, the gross demand, i.e. the cumulative value of orders placed by investors in a certain IPO, needs to be between 2-3 times the size of the actual IPO (allocated demand). A successful IPO provides a fair valuation of the company in the IPO and supports the company’s share price once it is listed. This means that for an IPO of 15% of Hidroelectrica, it is necessary to generate a gross demand of over 6 billion Euros,” claims FP.

The document also shows that if the gross demand in the case of a listing that would take place only on the BVB would be only 1-1.5 billion euros, a dual listing would mean a gross demand of 3.0-6.0 billion euros, a fact that would increase the value of the IPO from 0.5-0.7 billion euros exclusively on the local market to 1.5-2 billion euros, in case of dual listing. As the seller in the IPO, Fondul Proprietatea can ensure that at least 50% of the shares are allocated to investors on the BVB.

“Listing on an international market will decisively support BVB’s transition to emerging capital market status. After the IPO, most of the liquidity will be on the BVB and also a significant part of the investors who initially participated in the international listing will transfer to the BVB”.

FP received shareholder approval to dispose of its entire stake of up to 19.94%

Hidroelectrica is the main electricity producer in Romania, with a production portfolio 100% from renewable sources and one of the largest hydropower producers in Europe. The company announced on Tuesday the intention of Fondului Proprietatea (FP), an alternative investment fund managed by Franklin Templeton International Services, to conduct an initial public offering of existing ordinary shares. The company also intends to apply for the admission to trading of its shares on the regulated market of the Bucharest Stock Exchange (BVB). The offer will take place after the approval of the prospectus by the Financial Supervisory Authority (ASF).

According to the offer, FP received the consent of the shareholders to dispose within the Offer of its entire participation of up to 19.94%, of the total number of shares issued by the Company. The number of shares to be sold in the public offering will be determined later (according to some sources, towards the end of this month). The Company will not carry out a capital increase in the context of the Offer and will not benefit in any way from the funds obtained as a result of the Offer. This will consist of a public offer addressed to retail and institutional investors in Romania, as well as eligible international institutional investors.

Admission is expected to take place in July 2023. Once admitted to trading, the Company’s shares will be included in the BVB’s BET index immediately after admission.

The Company and the Fund will be subject to a restriction on the disposal of the Company’s shares for a period of 180 days, and the majority shareholder of the Company will be subject to a restriction on the disposal of the Company’s shares for a period of 12 months from the date of admission.

Also, Citigroup Global Markets Europe, Erste Group Bank, Jefferies and Morgan Stanley Europe are acting as Joint Global Coordinators in connection with the Offer. Banca Comercială Română, Barclays Bank Ireland, BofA Securities Europe, UBS Europe, UniCredit Bank and Wood & Company Financial Services act as Joint Holders of the Subscription Register. Auerbach Grayson, BRD – Groupe Société Générale, S.S.I.F. BT Capital Partners and S.S.I.F. Swiss Capital are Joint Lead Managers. Rothschild & Co Equity Market Solutions is the Financial Adviser to the Fund and STJ Advisors is the Financial Adviser to the Company in connection with the Initial Public Offering.

“Hidroelectrica has a long history of significant growth and profit generation for shareholders, being the main electricity producer in Romania, with a production portfolio 100% from renewable sources. We are well positioned to continue the growth trend with a clear strategy focused on operational efficiency, business diversification and expansion and ensuring return on capital, all supported by a favorable long-term sectoral and macroeconomic environment. The proposed Initial Public Offer represents a natural and exciting step in our evolution, because the listing of Hidroelectrica on the Bucharest Stock Exchange will help us diversify our shareholder base and develop our international profile,” said Bogdan Badea, Executive Director of Hidroelectrica.

Autor: Bogdan Tudorache

Active in the economic and business press for the past 26 years, Bogdan graduated Law and then attended intensive courses in Economics and Business English. He went up to the position of editor-in-chief since 2006 and has provided management and editorial policy for numerous economic publications dedicated especially to the community of foreign investors in Romania. From 2003 to 2013 he was active mainly in the financial-banking sector. He started freelancing for Energynomics in 2013, notable for his advanced knowledge of markets, business communities and a mature editorial style, both in Romanian and English.

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