Romania: Electrica power company collects 444MEUR in London and Bucharest stock market

4. July 2014. / SEE Energy News

Electrica obtained 444,31 million euros in its IPO consisting of an offer of shares on the Bucharest Stock Exchange and Global Depositary Receipts (GDR) on the London Stock Exchange. The final price was set at 11 lei/share and 13.66 dollars/GDR.

Electrica’s offer was subscribed 200%, said Minister for Energy, Răzvan Nicolescu, adding that the intermediation syndicate was asked to consider a 5 percentage points increase for the local retail tranche, from 15% to over 20%.

“The objective of the subscription has been exceeded. 200% subscription. Today I asked the intermediation syndicate to consider, given the retail offer, the percentage increase for retail, which was of 15%. The intention is to provide the retail in Romania over 20%. The intermediation syndicate is analyzing this proposal. We’re talking about the greatest intention of listing on the stock market in Romania ever . This is the first privatization that we want to achieve using exclusively the capital market. I’m satisfied with the level of subscription, a comfortable one. The majority of institutional investors are from Romania, Poland, England and the U.S.,”said Nicolescu.

Gabriel Dumitraşcu, manager of the General Directorate for Privatization and Management of State Ownership in Energy, said the IPO generated a significant response of Electrica’s investors, especially since in Europe there were other 22 ongoing IPOs, some of which have failed, such as Wizz Air’s, which has not received sufficient response from investors.

“The environment was hostile for us, from the first day of listing. The tranche of 7% for small retail investors had as support more than 12.4 million shares and was oversubscribed, with more than 42 million applications, of which 8.5 million shares required inside the guaranteed tranche which was up to 10 million shares. Others are subscriptions on the open tranche. Large investors had high allocationof 8% of the offering, of 14.1 million shares, which generated a demand for over 120 million. Significantly. Subscription doubled in the last day, that says a lot,” said Dumitraşcu.

Retail investors from Romania will receive a larger portion

“We agreed that it is good to offer a bonus to the Romanian retail. We’ll see what will be the understanding agreed by the parties. Following the allocation, we aim a second objective, that to keep the positive evolution of the shares on the secondary market,” said Dumitraşcu.

Electrica exercised the right to reallocate almost 6% of shares destined to institutional investors to retail investors and announced allocation indices for them. Large retail investors will receive 147 shares for every 1,000 titles subscribed, while small retail investors who subscribed shares with 5% discount will get 330/1.000, according to a notice posted by IPO’s lead manager.

Discounted offer oversubscribed 8 times

Large retail investors subscribed more than 120 million shares in the offer by 953 orders, demand exceeding 8.4 times the volume put on sale for the listing in this segment of 14.175 million titles. The largest order exceeds 3.5 million shares and many more subscriptions were placed for more than 3 million titles, according to brokers.

Small retail investors subscribed only 8.271 million shares in order to guarantee minimum package of up to 1,000 titles, mechanism limited to 10 million shares.

On the discount tranche for small retail investors were subscribed 33.9 million shares by 4,473 orders, while the amount available after deducting the allocated securities guaranteed orders up to 1,000 shares is of 4.132 million shares. The 5% discount offer for small investors who subscribed in the first five days of the offer more than
1,000 shares was oversubscribed 8.2 times. In this segment, the shares will be distributed pro-rata, so that investors can expect to receive about eight times less than the value of subscribed shares.

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