Romania’s government has proposed six candidates for interim positions on the supervisory board of power company Hidroelectrica, prompting protests from minority shareholder Fondul Proprietatea (FP). 

The move was surprising and it puts a question mark over the quick IPO expected after the company recently exited insolvency procedures in a robust financial position. The government seems to be proposing board members on political grounds, concomitantly buying time to make a decision about whether to go ahead with the IPO. 

The candidates are supposed to be endorsed for a four year term at a shareholders’ meeting April 19. The state has the power to ensure their appointment, since it holds 80% of shares in Hidroelectrica.

However, FP objected to the government’s move, saying in an April 4 statement that a better solution would have been to extend the term of the incumbent board members until a fully functional board is appointed within a few months, as a selection procedure is already underway. The procedure hinders and delays the expected IPO, the fund’s management said.

“We are disappointed that the ministry of energy chose to propose yet another interim board at Hidroelectrica. What Hidroelectrica needs, as the most valuable Romanian company, is stability and predictability, as well as top professionals on its board,” said Greg Konieczny, Fondul Proprietatea CEO and portfolio manager, in an emailed statement. 

The government’s move was also surprising because of the identity of the candidates. None of the candidates has experience in the sector, and most are involved in politics and the media. The list includes 32-year-old Ioana-Andreea Lambru, who is currently employed in the central government after a rapid political rise following an alleged affair with a top politician.

The possible attempt to delay the IPO comes in the context of the government’s plans to launch a new sovereign wealth fund under which it plans to bring all the state-controlled companies (most likely Hidroelectrica included). The final purpose of the wealth fund is still unclear, as is the list of the companies to be included, the management (private versus public) of the fund, and the specific operations it will carry out - for example whether it will hold IPOs of the companies in its portfolio or issue new shares or bonds. 

Hidroelectrica has to undergo a streamlining process before its IPO, under which non-core (or under-performing) assets would be sold, but the listing was expected this year.