Bloomberg News

Romania Electrica IPO Oversubscribed Two Days Before Closing

June 24, 2014

Electrica SA’s share sale is drawing “high interest” from local and international investors who are flocking to Romania’s biggest initial public offering, sale manager Dana Mirela Ionescu said in an interview.

The offer of a majority in the Black Sea EU state’s biggest power distributor has attracted 13,700 subscriptions from companies and individuals two days before its scheduled close, exceeding the record 12,000 in Romgaz SA’s share offering last year, Ionescu, the head of Raiffeisen Bank Romania SA’s capital markets department, said yesterday.

Romania, which has been selling stakes in state-owned companies to cover its budget deficit and reduce government influence in the economy, wants to raise at least 1.95 billion lei ($602 million) from a majority in the power distributor.

“We have high interest for this offering from both local and international investors from all over Europe and the U.S.,” Ionescu said in an interview in Bucharest. “This IPO has also managed to attract new investors, as we see from the number of subscriptions.”

Romania’s benchmark BET stock index rose 0.2 percent to 6,775.79 points at 10:45 a.m. in Bucharest today. Fondul Proprietatea SA shares rose 0.1 percent to 0.8145 lei.

Selling Majority

The former communist country raised 1.7 billion lei by selling a minority stake in natural-gas producer Romgaz in November, its biggest IPO so far.

The plan is part of Romania’s pledge to the EU and the International Monetary Fund, which has approved a third consecutive loan accord for Romania since 2009 to shield the Balkan country from market turbulence. A planned review of the agreement was postponed to November because of disagreements with the government over reductions in social contributions.

“This is the first IPO where the state loses majority ownership, and I think it can serve as a good starting point for other state-owned companies in the future,” Ionescu said. “We have worked with the European Bank for Reconstruction and Development on a corporate governance plan to assure private investors that their rights as minority shareholders will be respected.”

Romania is offering about 177 million new Electrica shares in Bucharest and via global depository receipts in London. The state, which now fully owns the power distributor, will cut its stake in the company to about 48.8 percent after the sale.

Further Sales

Citigroup Inc. (C:US), BRD-Groupe Societe Generale, Raiffeisen, Societe Generale SA (GLE) and Swiss Capital SA are managing the offering.

Romania will probably meet the criteria to be upgraded to emerging-market status by MSCI Inc. (MSCI:US) once the Electrica shares start trading, according to Ionescu.

Depending on how the share sale goes, the government is also considering selling more of state-controlled companies including Transelectrica SA, Romgaz SA and Transgaz SA next year, Prime Minister Victor Ponta said on June 12. It may be left with less than 50 percent in some of the companies, while it will keep stakes of larger than one third in each, he said.

To contact the reporter on this story: Andra Timu in Bucharest at atimu@bloomberg.net

To contact the editors responsible for this story: Balazs Penz at bpenz@bloomberg.net Michael Winfrey, Paul Abelsky


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