Romanian minister says EBRD interested in 5% of Hidroelectrica

By bne IntelliNews February 18, 2020

Romania’s government has received a letter of intent from the European Bank for Reconstruction and Development (EBRD), which reportedly wants “to be part of the listing” of state-owned hydropower producer Hidroelectrica, Economy and Energy Minister Virgil Popescu disclosed at an energy conference on February 17.

Earlier, at the end of January, Popescu said that he already discussed Hidroelectrica’s IPO with the EBRD and was going to hold more meetings.

"Today [January 31] I had a discussion with the EBRD. Next week I will have a deeper one. I think the EBRD will be in the process of listing," said the minister at the time.

The EBRD would actually be interested in taking over a 5% stake in the company as part of the pre-listing process, Popescu has now revealed. The EBRD did not immediately respond to Reuters for comment.

Popescu did not provide any detail on whether the “pre-listing” would be a competitive process to which more investors would be invited.

However, this pre-listing “would raise the value of the company,” Popescu said.

It is likely that Popescu was referring to a pre-IPO placement, a private sale of large blocks of shares before the stock is listed on a public exchange. The buyers are typically private equity firms, hedge funds, and other institutions willing to buy large stakes in the firm.

Due to the size of the investments being made and the risks involved, the buyers in a pre-IPO placement usually get a discount from the price stated in the prospective for the IPO.

Asked what Hidroelectrica will do with the money raised by selling a 20% stake in the planned IPO — some €200mn — Popescu said on a vague note that “the company can have a very ambitious investment plan” mentioning green technologies, wind and solar power.

Commenting on the IPO proceedings, Hidroelectrica CEO Bogdan Badea was no more specific, as he said the company intends to use money “for the development and consolidation of the company.”

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