Non-institutional investors on the Bucharest Stock Exchange have mobilized almost 1 billion euros to buy shares of Hidroelectrica in the first five days of the biggest initial public offering in Romania. They have placed subscription orders for over 42.3 million of the company’s shares. That is almost four times more than the size of the tranche allotted to them in the IPO (11.7 million shares).
The retail investors will receive only a fraction of the shares they subscribed to. the final allotment rate depends on the total number of shares subscribed and the seller’s potential decision to increase the number of shares for the retail tranche.
The retail investors were asked to pay the top price of 22.6 euros per share and to transfer the money into the collection account, which is one of the conditions to have the subscription orders validated. The final sale price will be decided at the end of the subscription period on 4 July, based on the demand from both retail and institutional investors. Given that the institutional tranche of 66.3 million shares was also reportedly oversubscribed after the first three days, the high demand will likely push the price up towards the top of the range.
At the maximum price of 22.6 euros per share, Fondul Proprietatea would cash in 1.77 billion euros for 78 million Hidroelectrica shares on sale in the IPO. The fund has also granted the IPO’s global coordinators and over-allotment option to meet the potentially high demand from institutional investors. This option also means that Fondul Proprietatea could sell its entire stake in Hidroelectrica (89.7 million shares or 19.94 % of the company) following this IPO.