Romanian hydropower giant Hidroelectrica announces imminent IPO

Romanian hydropower giant Hidroelectrica announces imminent IPO
By Iulian Ernst in Bucharest June 7, 2023

Hidroelectrica, the biggest power generation company in Romania, announced on June 6 that its shareholder Fondul Proprietatea intends to proceed with an initial public offering (IPO) to sell all or part of its 19.94% stake. 

Hidroelectrica has a 100% renewable portfolio with an installed hydropower production capacity of approximately 6.3 GW and an installed onshore wind capacity of 108 MW from the Crucea wind farm.

“We are well positioned to continue the growth trend with a clear strategy focused on operational efficiency, diversification and expansion of the business and ensuring return on capital, all supported by a favourable long-term sectoral and macroeconomic environment,” said Bogdan Badea, Hidroelectrica’s CEO, in a press release.

The IPO was discussed for the first time at Hidroelectrica in 2013 when the company was supposed to issue new shares and raise capital for development. 

Based on the updated valuation report using discounted cash flow method as the primary valuation method updated with the financial information as of March 31, 2023, Fondul Proprietatea revised downwards the estimated value of Hidroelectrica to RON54.3bn (€11bn) in May 2023, from RON55.7bn at the end of December 2022. The fund's 20% stake was thus valued according to a report published on the Bucharest Stock Exchange at RON10.86bn (€2bn). No updated valuation in connection to the IPO has been made available yet.

Under the structure proposed by Fondul Proprietatea, the IPO would, however, safely be the largest in the history of Romania’s capital market, above the RON1.9bn (€428mn) IPO by the electricity utility Electrica in 2014. 

The offer will take place after the approval of the prospectus by the Romanian Financial Supervisory Authority (ASF). Hidroelectrica says it plans to apply for admission of its shares to trading on the regulated market of the Bucharest Stock Exchange. The admission is expected to take place in July 2023.

The IPO will consist of a public offering to retail and institutional investors in Romania and an offering to eligible international institutional investors. The exact calendar of the IPO and listing, the number of shares to be initially offered and the target price will be determined at a later date, Hidroelectrica announced. 

Fondul has previously received shareholder approval to dispose of its entire 19.94% holding in the IPO and list the shares at the Bucharest Exchange. The company itself will not raise new capital in connection with the offering and will not receive any proceeds.

Citigroup Global Markets Europe, Erste Group, Jefferies, and Morgan Stanley Europe are the joint global coordinators of the Hidroelectrica IPO. BCR, Barclays Bank Ireland, BofA Securities Europe, UBS Europe, UniCredit Bank, and Wood & Company Financial Services are joint bookkeepers. Auerbach Grayson, BRD-Groupe Societe Generale, BT Capital Partners, and Swiss Capital are joint managers.

Rothschild is Fondul Proprietatea’s financial consultant for the transaction while STJ Advisors is the company’s financial consultant.