Romania: Hidroelectrica’s IPO not possible this year but could take place in 2021

4. May 2020. / SEE Energy News

The initial public offering (IPO) of the largest Romanian electricity producer, in which the fund holds 20 % stake, is not possible in this year, but it could happen in 2021, Johan Meyer Portfolio Manager of investment fund Fondul Proprietatea (FP) has said.

Meyer said that Hidroelectrica continues to take the necessary steps to select consultants to prepare for the IPO. However, the current situation with coronavirus pandemic will most likely lead to a postponement of the listing. But, FP does not anticipate a major postponement, no later than the first or second quarter of next year. The company’s management takes measures to achieve this goal and FP believes that the majority shareholder, the Romanian state, continues to support the listing of the company.

He added that the order requiring energy companies to submit 5-year investment plans makes sense in theory, but in practice it is extremely difficult for them to make detailed plans in a very short time and in such an unpredictable environment. FP does not expect them to be able to make major infrastructure commitments, for example. Any plan must have economic objectives, so it must make sense from the perspective of the company and its shareholders.

Earlier in April, Hidroelectrica signed Lazard, STJ and Deloitte as consultants in the process of preparing the company’s initial public offering on the stock exchange. The company launched a new tender for IPO advisory services in early March, after dismissing all bids placed in a previous tender launched in January. Hidroelectrica gave no reasons for rejecting the offers at the time. The three companies were the sole candidates in the first procurement procedure. The signed agreement is worth some 1.9 million euros. This so-called equity consultant is totally different from the consultant that will be later selected to manage the actual sale process and the listing. 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.

 

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