Romanian private investment fund Fondul Proprietatea (FP) said that Romanian authorities now have a window of opportunity to use the political consensus following the formation of a new ruling coalition and go ahead with the planned initial public offering (IPO) of hydro-based electricity producer Hidroelectrica.
FP has repeatedly argued for the listing of Hidroelectrica„s shares and has never hidden that it has a legitimate interest in it, as the energy
company holds the largest share in its portfolio – some 60 % as of September 2021.
The listing of Hidroelectrica‟s shares would bring benefits to a multitude of actors: the state (as a shareholder), the pension funds (allowing
diversification), households (that would get access to better placement alternatives) and the local stock exchange that needs capitalization and liquidity to be promoted to the status of an emerging market MSCI.
On the corporate side, a listed and supervised company can ensure decision-making transparency and good corporate governance,
prevent arbitrary changes in boards and decision-making, and provide a chance for long-term development strategies.
The company is ready to start the final preparation for the listing, which could be completed in the first half of this year and has the potential to become the most successful listing of the Romanian state.
The economic outlook has changed radically since Romania banned the sale of state assets stakes in financial and non-financial companies for a period of two years in 2020. However, it remains unclear whether the law was justified at the time it was passed, but at this moment it is hard to argue for such restrictions.
Hidroelectrica‟s IPO has been expected for many years. In April 2012, a consortium made of BRD, Citigroup, Societe Generale and Intercapital Invest was selected to manage the sale of a 10 % stake in Hidroelectrica, but the company went into insolvency a few months later.
After Hidroelectrica completed its restructuring process, in January 2014, the Government carried out another selection process and chose Raiffeisen Bank and Morgan Stanley to manage the sale of a 15 % stake in Hidroelectrica through IPO. However, this sale did not take place.
In May 2020, Hidroelectrica selected Dentons Europe as its legal advisor for the upcoming initial public offering of the company‟s shares, as well as STJ Advisors Group as an equity adviser to provide consulting services for the planned IPO. Previously, Hidroelectrica signed Lazard, STJ and Deloitte as consultants in the process of preparing the company‟s initial public offering (IPO) on the stock exchange.
