Private investment fund Fondul Proprietatea (FP) 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 (BVB) 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 IPO. FP estimates that the preparations for the IPO could take at least 6 to 9 months.
FP officials have announced that they are prepared to convene an extraordinary general meeting of Hidroelectrica’s shareholders 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…).
According to the FP, 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.
FP further states that For a successful IPO, 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. In the case of Hidroelectrica, this means that it is necessary to generate gross investor demand for Hidroelectrica shares of more than 6 billion dollars, which cannot be attracted from the Bucharest Stock Exchange alone. FP officials also cited other arguments in favor 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.
