Agricover's IPO flops on Bucharest Stock Exchange

Agricover's IPO flops on Bucharest Stock Exchange
The listing would have been the BVB's largest at €85mn. / bne IntelliNews
By Iulian Ernst in Bucharest May 18, 2023

Romanian leading agribusiness group Agricover Holding  announced on May 17 it had abandoned its planned listing on the Bucharest Stock Exchange (BVB) after it failed to draw sufficient interest from investors. The company blamed it on “the geo-political, macroeconomic, and financial markets context”.

The company was planning to raise €85mn in the largest-ever IPO on the BVB by selling  42% of its shares and issuing new shares amounting to 21% of the existing number of shares as part of the offer.

The listing flop comes as the BVB is preparing for the landmark listing of up to 20% of power group Hidroelectrica, expected in the next few months. Franklin Templeton, the manager of Fondul Proprietatea, which owns the 20% state stake in Hidroelectrica, argued for a dual listing in Bucharest and London, saying the local market was not liquid enough, but its shareholders approved the proposal backed by the Romanian authorities for a sole listing in Romania.  

The European bank for Reconstruction and Development (EBRD) holds a 12.7% stake in Agricover and was planning to sell a 10% stake in the IPO. The company was founded by Jabbar Kanani, who intended to sell 32% of his 87.2% stake in the company under the IPO.

Agricover hasn’t revealed details such as the total subscriptions placed by institutional investors, who were allotted 90% of the IPO. Retail investors subscribed only 52% of the tranche allotted to them.

At the maximum IPO price of RON0.5 per share, Agricover Holding would have been valued at RON1.08bn (€218mn). The pre-share issue valuation of RON950mn (€190mn) stands for 10.4 times the net profit recorded by the group in 2022, which was RON91.3mn (€  

The IPO, which was managed by Wood & Company together with local brokerage firm Tradeville, started on May 4 and ended on May 16. It was carried out on short notice, particularly given the rather complex business model conducted by Agricover. The group has two main segments of activity: the distribution of agricultural inputs, carried out by Agricover Distribution (agribusiness) and the specialised financing for farmers, provided by a non-banking financial institution, Agricover Credit IFN (agri-finance).