Croatia: Warning that power utility HEP IPO shares offering is bad for HEP

Croatian Electric Power Industry (HEP) is not ready for privatization through an initial public offering (IPO) of shares; it is noted in an analysis which made professors of the Zagreb Faculty of Economics for HEP Works Council needs.

Professors Ivan Lovrinovic and Drago Jakovcevic state that before the privatization it should be defined whether there is a real need for recapitalization, will distribution transmission and hydropower plants be privatized, , whether there is the strategy for development and on what will be spend the collected money.

Currently it is not optimal moment for IPO as the financial position of the company is excellent, new projects are only partially defined or are missing, and the preparation for IPO is weak.

There are facts against IPO that current developments in the capital markets are pessimistic, and the wholesale electricity price is low and discourages investment in new production capacity. The authors concluded at the end it was necessary to delay the process of HEP privatization.

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