Romania’s Financial Supervisory Authority (ASF) on June 22 endorsed the prospectus filed by a syndicate of banks on behalf of Hidroelectrica, for the initial public offering (IPO) of a stake of up to 17.34% in the hydropower company put up for sale by minority shareholder Fondul Proprietatea (FP).

Probably the most important event since the Bucharest Stock Exchange (BVB) was re-opened in 1995, the IPO is expected to greatly increase the size of Romania’s equity market and liquidity.

The subscription period is expected to begin on June 23 and expire eight working days later on July 4. The outcome will be announced on July 5 and the shares will be transferred to the buyers on July 10, two days before they are available for trading on the BVB.

Fondul Proptietatea is putting up for sale 78mn shares or a 17.34% stake out of its 19.94% participation. Depending on the demand, FP may decide to sell its entire stake (89.7mn shares). This option will be decided by the syndicate of global coordinators within 30 days after the shares are listed.

Three groups of Romanian institutional investors (“main investors”) pledged to buy at least RON2.24bn worth of shares (i.e. at least 20mn shares, or 4.44% of Hidroelectrica), according to the prospectus.

Hidroelectrica was evaluated at between RON42.3bn and RON50.4bn (€8.5bn to €10bn), i.e. between 8.6 times and 10.2 times the net profit registered in the last 12 months (Q2 2022 – Q1 2023), according to the prospectus. 

The price for the individual investors, who were earmarked a 15% tranche, was set at RON112 per share with a 3% discount for the first five working days of the subscription period. The price for institutional investors (85% of the total) was set between RON94 and RON112 per share. Assuming that the entire 17.34% stake is fully subscribed at the maximum price of RON112 per share, Fondul Proprietatea would get RON8.8bn (nearly €1.8bn) for the shares. 

Hidroelectrica and FP will be subject to a prohibition of alienation of Hidroelectrica’s shares for a period beginning on June 22, 2023, and ending 180 days from the date of admission (listing). The majority shareholder (the state) will be subject to a prohibition of alienation of the company's shares for a period beginning on June 22, 2023, and ending 12 months after the date of admission, subject to certain exceptions provided for in the prospectus.