State and Fondul Proprietatea renew the agreement on Hidroelectrica’s IPO

Shareholders of Hidroelectrica hydropower producer – Ministry of Energy and Fondul Proprietatea – signed an agreement with the intermediary syndicate comprising Morgan Stanley and Raiffeisen Bank, which establishes the resumption of the obligations under the Engagement Letter regarding Hidroelectrica’s Initial Public Offering (IPO).

The initial Engagement Letter was signed in February 2014 and appointed the syndicate comprising Morgan Stanley and Raiffeisen Bank to act as intermediary in relation to Hidroelectica’s listing on the capital market. The parties agreed to suspend the obligations under the Engagement Letter in June 2014 due to the company reentering insolvency proceedings, which prevented the achievement of the objectives set in the previously agreed timetable.

“The resumption of the obligations under the Engagement Letter represents an essential step towards the company’s listing. We would like to congratulate Hidroelectrica for the recent agreement, a ground-breaking development for what will be this year’s largest IPO in Central and Eastern Europe and also the largest in the history of the local capital market. We would also like to encourage all parties involved to speed up the preparatory work and the decisions that still need to be taken for a successful listing, such as the appointment of the Supervisory Board and the Directorate and the transfer of the complex function investments. Hidroelectrica’s listing is crucial in the perspective of the local stock exchange upgrade to the emerging market status and, thus, represents a unique opportunity for the Government to make a historical transaction that brings Romania closer to this objective,” Greg Konieczny, Fund Manager of Fondul Proprietatea, commented in this regard, according to a press release.

Hidroelectrica’s listing would be the first IPO of a state owned company in Romania in the last two years.

Besides the 15 percent stake in Hidroelectrica the state committed to list following the share capital increase, Fondul Proprietatea intends to sell during the IPO a 5 percent stake of its own shares and another 3.74 percent stake representing the subscription rights the Fund has in the share capital increase process. Based on the valuation of Hidroelectrica in FP’s NAV as at 31 March 2016 the size of the IPO could be RON 3.15 billion (USD 802 million).

In accordance with the current timetable, Hidroelectrica is due to be listed by the end of this year.