Hidroelectrica shareholders poised to announce long-awaited IPO

Hidroelectrica shareholders poised to announce long-awaited IPO
By Iulian Ernst in Bucharest March 30, 2022

The Romanian government has agreed to summon the shareholders of the state-controlled power company Hidroelectrica on March 31, in order to approve the listing of the energy company's shares on the Bucharest Stock Exchange (BVB) following a public share offering initiated by minority shareholder Fondul Proprietatea (FP), which announced the news in a note to investors on March 29.

 The “potential agreement among shareholders” on the listing of Hidroelectrica may result in a major IPO estimated at around €1.8bn — an event that could bring the BVB onto MSCI’s list of emerging markets and propel it upwards on the FTSE Russell list.

FP has been seeking an IPO of the hydropower company for years. The stake of nearly 20% in Hidroelectrica accounts for 66.15% of FP's net asset value (NAV) as of 28 February 2022.

Besides the initiation of the procedures for another buy-back programme involving 325mn shares worth around €135mn, reported by FP the same day, the potential Hidroelectrica IPO announcement pushed up the shares of Fondul Proprietatea by 4.42% on March 29.

The shares of Hidroelectrica offered under the IPO procedure are expected to be part of the 19.9% stake held by Fondul Proprietatea. The Romanian government was initially planning to issue new Hidroelectrica shares so as to consolidate the company’s financial resources ahead of major investment projects. But no such details were announced recently. In turn, FP took steps to put its shares up for sale under a procedure that will help the government in its future plans as well.

Earlier this year, Energy Minister Virgil Popescu confirmed that the government agreed to allow FP to list Hidroelectrica’s shares as part of the IPO operation initiated by the fund.

Johan Meyer, portfolio manager of Fondul Proprietatea, recently estimated the value of Hidroelectrica at over $10bn. If listed, the company would be worth 10-15% more, he commented.

For this year, the energy company expects RON7.4bn and plans to distribute RON2.47bn out of the net profit envisaged at RON2.9bn.