Romania's Hidroelectrica valued at €9.4bn in historic IPO

The initial public offering (IPO) of major Romanian electricity producer Hidroelectrica ended at a price of RON104 (€21) per share, resulting in a €9.4bn valuation for the company.

Minority shareholder Fondul Proprietatea (FP) will get around RON9.3bn (€1.9bn) after it decided to sell its entire 19.94% stake in the company.

"We are talking about an event awaited for more than 10 years, as well as the biggest listing in the history of the Bucharest Stock Exchange," Romanian Energy Minister Sebastian Burduja said in a statement.

"This historic success of listing Hidroelectrica shows that it was the right choice," he said.

The small investors that placed their money to buy Hidroelectrica shares were eventually allotted a 20% portion of the 89.7mn shares sold by Fondul Proprietatea, representing 19.94% of Hidroelectrica, more than originally announced. 

The IPO managers with FP’s consent used the entire extra allotment of 11.7mn shares to increase the size of the offering from 78.0mn shares (17.34% of Hidroelectrica) to 89.7mn shares.

This resulted in 53% more shares for small investors (17.9mn) and 8.2% more shares for institutional investors (71.8mn), compared to the initial distribution.

Small investors will thus get 32 shares for every 100 shares subscribed, a pro-rata allocation 53% larger than estimated before the release of the IPO outcome. 

Romania’s blue chip index rose by 2.2% on the day the Hidroelectrica IPO ended.

The average prices of Romanian blue chip companies listed on the Bucharest Stock Exchange rose by 2.2% on average on July 5, after the end of the Hidroelectrica IPO subscription period left individual investors with RON4.3bn in their trading accounts.

Oil and gas major OMV Petrom (+5.7%), the electricity utility group Electrica (+4.9%) and Purcari winery (+4.8%) were the main winners of the day when investors had to decide on the utilisation of the money previously mobilised for Hidroeelctrica IPO.

The upward shift has probably not ended. "The H2O share allocation was like opening a bottle of champagne: it released the pressure felt in the market in recent months. Now that the H2O shares were allocated, the rest of the money has been released and most of it is invested in shares with potential. I believe shares’ prices will keep rising in the coming period", said Dragoş Mesaroş, trading director of brokerage Goldring, quoted by Ziarul Financiar.