- The shares close at 110 lei against an IPO price of 104
- Europe’s largest IPO to date in 2023
- The energy transition arouses interest
- Romania hopes the IPO will increase investor interest
BUCHAREST, July 12 (Reuters) – Romania’s state-backed power producer Hidroelectrica (ROH2O.BX) rose in its trading debut on Wednesday after Europe’s biggest initial public offering (IPO) this year, a sign investors are craving new shares Entries may recover.
Shares soared as much as 9.7% on the Bucharest Stock Exchange before closing at 110 lei, more than the IPO price of 104 lei, which put the state-owned company at 46.8 billion lei ($10.4 billion). ) rated.
Trading volume reached around 735.8 million lei on the first day, seven times the daily average for the entire exchange this year.
Hidroelectrica is among a handful of European companies rushing to go public ahead of the summer doldrums as bankers hope for a market recovery in the coming months after soaring interest rates have all but shattered IPO activity in 2022 brought to a halt.
Romania expects the IPO, which has been discussed for over a decade, to free up the European Union’s recovery funds and hopes it will further boost investor demand in the country.
The state owns 80% of the country’s largest electricity producer, which has a capacity of 6.3 gigawatts from 182 hydroelectric power plants.
Selling minority shareholder Fondul Proprietatea (FP.BX), a fund managed by US wealth manager Franklin Templeton (BEN.N), may raise up to $2 billion from the IPO, including an over-allotment option.
The share placement was several times oversubscribed, with 80% of the shares going to institutional investors, including the country’s largest pension funds.
“I think in five to ten years we will be looking back at a pivotal moment in the history of the Romanian capital market,” said Johan Meyer, portfolio manager at Fondul Proprietatea, during the stock’s opening ceremony.
The Bucharest bourse chief said the listing could help lift the country from “frontier market” to “emerging market” status in the MSCI indices.
Global index provider FTSE Russell has upgraded the Bucharest Stock Exchange from frontier to secondary emerging market status in 2020.
With a combined market cap of around $46.2 billion, the Bucharest Stock Exchange needs liquidity and more diverse offerings, according to pension funds, which are among its largest institutional investors.
Hidroelectrica’s zero-emission fleet has been a magnet as Europe decarbonizes.
In Germany, which is looking to accelerate its switch from natural gas, hydrogen company Thyssenkrupp Nucera (NCH2.DE) also started trading in Frankfurt last week.
Last year, Hidroelectrica’s adjusted EBITDA margin reached 64% of sales, double the 30% margin of the Austrian Verbund (VERB.VI), one of Europe’s largest hydroelectric power generators and closest competitor.
Reporting by Luiza Ilie in Bucharest; Additional reporting by Pablo Mayo Cerqueiro in London; Adaptation by Jason Hovet, Conor Humphries, Barbara Lewis, Emelia Sithole-Matarise and Sharon Singleton
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