Hidroelectrica, the largest power generation company in Romania, announced on June 6 that its shareholder Fondul Proprietatea intends to conduct an initial public offering (IPO) to sell all or part of its 19.94% stake.
Hidroelectrica has a 100% renewable portfolio with an installed hydroelectric production capacity of approximately 6.3 GW and an installed onshore wind capacity of 108 MW from 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 a return on investment, all supported by a favorable long-term sectoral and macroeconomic environment,” said Bogdan Badea, Hidroelectrica CEO, in a press release.
The IPO was first discussed at Hidroelectrica in 2013, when the company was set to issue new shares and raise capital for development.
Based on the updated valuation report using the discounted cash flow method as the primary valuation method, updated with the financial information of March 31, 2023, Fondul Proprietatea revised the estimated value of Hidroelectrica down to RON 54.3 billion (EUR 11 billion) in May 2023 €). At the end of December 2022, the value was RON 55.7 billion. The fund’s 20% stake was thus valued at RON 10.86 billion (€2 billion), according to a report published on the Bucharest Stock Exchange. There is no updated valuation in connection with the IPO available yet.
However, under the structure proposed by Fondul Proprietatea, the IPO would certainly be the largest in the history of the Romanian capital market, surpassing the IPO of electric utility Electrica in 2014 at RON1.9 billion (EUR 428 million).
The offer will be made following the approval of the prospectus by the Romanian Financial Supervisory Authority (ASF). Hidroelectrica plans to apply for admission of its shares to trading on the regulated market of the Bucharest Stock Exchange. Approval 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 schedule for the IPO and listing, the number of shares initially offered and the target price will be determined at a later date, Hidroelectrica announced.
Fondul has previously obtained shareholder approval to sell its entire 19.94% stake in the IPO and list the shares on the Bucharest Stock Exchange. The Company itself will not raise any new capital or receive any proceeds in connection with the Offering.
Citigroup Global Markets Europe, Erste Group, Jefferies and Morgan Stanley Europe are the joint global coordinators of Hidroelectrica’s IPO. BCR, Barclays Bank Ireland, BofA Securities Europe, UBS Europe, UniCredit Bank and Wood & Company Financial Services are joint accountants. Auerbach Grayson, BRD-Groupe Societe Generale, BT Capital Partners and Swiss Capital are joint managers.
Rothschild is Fondul Proprietatea’s financial advisor on the transaction, while STJ Advisors is the company’s financial advisor.
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