Hidroelectrica to conduct IPO on Bucharest Stock Exchange in July

Fondul Proprietatea intends to sell most of its 19.94% ownership of state-owned Hidroelectrica or the entire stake. The companies are expecting the stock listing next month on the Bucharest Stock Exchange.

Within the preparations for a stock market debut, Romania’s state-owned hydropower plant operator Hidroelectrica has decided to give potential new investors a clearer picture of the path ahead. It agreed with Masdar to invest in renewables through a joint venture, submitted offers for green energy projects, started to plan a hydrogen production facility and revived several dormant hydropower projects.

The initial public offering at the Bucharest stock exchange is scheduled for next month, according to the latest announcement. But the company won’t raise capital – only the minority shareholder, Fondul Proprietatea, intends to sell some or all its holdings. The fund, managed by Franklin Templeton International Services, owns 19.94% of the utility.

The IPO will take place after the Romanian Financial Supervisory Authority approves the prospectus, the statement reveals. Hidroelectrica’s shares are set to be included in the BET index. According to the rules, the government won’t be allowed to sell any of its shares for at least 12 months after the listing.

Ensuring return on capital

“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 return on capital, all supported by a favourable long-term sectoral and macroeconomic environment,” Chief Executive Officer Bogdan Badea said.

Hidroelectrica doesn’t intend to raise any capital in its IPO

The supervisory board has vowed to continue to distribute 90% to 100% of profits through dividends, compared with the legal minimum of 50%. It also said it would finance more investments with bonds and loans.

Hidroelectrica reported a 37% jump in first-quarter revenue from the same period in 2022, to EUR 680 million, translating to a surge in net income of 34% to EUR 351 million.

Whole decade of preparations

The IPO is part of an agreement with the European Commission regarding the adoption of the National Recovery and Resilience Plan (NRRP or PNRR). Several governments and the company have been trying unsuccessfully to organize the stock listing for a decade now.

Reuters reported, quoting an anonymous person with knowledge of the matter, that Hidroelectrica wants to raise more than EUR 1 billion. Franklin Templeton recently valued Hidroelectrica at over USD 10 billion and said a stock market listing would boost it by 10% to 15%.

In the past five years, Hidroelectrica had a share of 29% in Romania in electricity production. It operates over 180 hydropower plants with 6.3 GW in total capacity and wind park Crucea, of 108 MW. According to a news report from early this year, the utility was the most likely candidate for taking over a 1.5 GW solar power project on state land, which would make it the biggest in Europe.