Romania plans Electrica IPO for June

By bne IntelliNews June 2, 2014

Clare Nuttall in Bucharest -

 

Romania on May 30 announced plans to list power company Electrica in Bucharest and London in June. Part of the government's ongoing privatisation programme, the IPO is likely to be the largest-ever in Romania. 

According to the Romanian Energy Department, which is carrying out the privatisation, power supplier and distributor Electrica will start the IPO process in mid June, with the aim of completing the listing by the end of the month, local press reports say. Bucharest hopes to raise $800m-$1bn, according to a government draft decision quoted by SeeNews. 

The sale of 177m new shares will take place in Bucharest, with global depository receipts (GDRs) representing four shares to be sold on the London Stock Exchange (LSE). The target for the float makes it far larger than the $520m IPO of gas utility Romgaz last year - which is currently the country's largest IPO to date. 

Electrica said in a May 30 statement to the LSE that it will launch the IPO subject to approval from the Romanian Financial Supervision Authority. Following the listing, Bucharest will hold 48.8% of the company, subject to a potential increase to 49.9%. The 177m new shares to be sold represent 105% of the total number of Electrica's existing shares, the statement says. Citigroup, Raiffeisen and Societe Generale have been appointed as joint global coordinators and bookrunners. 

Pushing privatisation

The IPO is part of the Romanian government's ongoing privatisation programme, which is a major element in Bucharest's commitments to the International Monetary Fund (IMF). In September, the IMF approved a new €1.98bn stand-by arrangement with the country; at the same time, the Romanian government requested a €2bn precautionary loan from the EU.

Progress on privatisation has been sluggish, with several sales dropped in recent years. However, with a stable government in place, Bucharest now looks to be starting to finally push the programme forward, and has made some progress with restructuring and sales of state companies - albeit with some hiccups still. 

The listing of a 10% stake in Nuclearelectrica in September was followed up two months later by the Romgaz float. Yet other efforts have fared less well. Posta Romana is due to go back on the block this year after an attempt to sell the debt-ridden postal company flopped last year. 

A €202m deal to sell 51% of freight transport company CFR Marfa to private Romanian rail company Grupul Feroviar Roman (GFR) also fell through in 2013. Transport Minister Dan Sova said in March that another attempt to sell CFR Marfa would be handled by a newly created privatisation department. Romania's largest chemicals company Oltchim is another entity earmarked for sale, but its process was postponed after failing to attract bidders ahead of a March 28 deadline. 

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