Renewables

IPO of Hidroelectrica on hold as Romania bans sale of state assets for two years

IPO of Hidroelectrica Romania sale of state assets

Photo: Pixabay

Published

June 18, 2020

Country

Comments

comments icon

0

Share

Published:

June 18, 2020

Country:

Comments:

comments icon

0

Share

The long-awaited stock market listing of the flagship hydropower producer in Romania was postponed yet again. Lawmakers in Bucharest voted to freeze all activity aimed at the privatization of any part of state-owned companies and the measure includes the initial public offering – IPO planned for Hidroelectrica.

The opposition, led by Social Democratic Party (PSD), managed to shore up 199 votes in the Parliament of Romania and approve a bill stipulating that stakes in government-controlled companies can’t be sold for another two years. Only 89 lawmakers were against the proposal, which particularly affects Hidroelectrica as it has picked an advisor in May for its planned initial public offering or IPO.

Prime Minister Ludovic Orban’s minority cabinet immediately said it is challenging the law at the Constitutional Court. Soon afterward, it extended the state of emergency for another month through mid-July, citing a unanimous vote by the National Committee for Special Emergency Situations.

The opposition pushed the bill through the Parliament of Romania and the minority government is taking it to the Constitutional Court

PSD reacted by announcing it would seek a vote of no confidence as soon as the state of emergency is abolished. The opposition argues the effects of the coronavirus pandemic would lower the valuation of state-owned companies and that the freeze on sales protects national interests.

On the other hand, European stocks have recently recovered most of the COVID-19-related historic plunge, suffered in February and March, thanks to massive stimulus from governments and central banks. There is still the risk of a second wave of the pandemic and its potential impact on the economy and markets.

The law’s initiators claim the impact of the COVID-19 pandemic is lowering the nominal value of state-owned firms

Investment fund Fondul Proprietatea, in which the government has a minority stake, holds almost 20% of Romania’s most valuable state company. Hidroelectrica was going to list as much as a fifth of its stocks.

Fondul Proprietatea said the ban on privatization may hamper recovery, potential investments and the development of the capital market.

Minority shareholder Fondul Proprietatea and the Bucharest Stock Exchange oppose the ban on sale of state assets

The management of the Bucharest Stock Exchange, BVB, also opposed the legislation. Global index provider FTSE Russell said in March that Romania was on track to be upgraded to a secondary emerging market status from its frontier grade. The state asset sales ban is an obstacle for BVB and the country’s position, analysts warned.

In April, in the wake of the coronavirus crisis, Romania temporarily prohibited the sale of majority stakes in all energy companies.

Comments (0)

Be the first one to comment on this article.

Enter Your Comment
Please wait... Please fill in the required fields. There seems to be an error, please refresh the page and try again. Your comment has been sent.

Related Articles

Regional Power Sector Exchange Western Balkans disitribution system operator dso grids ohrid giz

Third Regional Power Sector Exchange in Ohrid: Power grids at core of energy transition

30 May 2025 - The third Regional Power Sector Exchange of the Western Balkans gathered over 80 energy professionals from the Western Balkans

Maja Maćić, Balkans Platform Head at Alcazar Energy

Maja Maćić: Alcazar Energy expands presence in Western Balkans

30 May 2025 - Maja Maćić, executive manager of Alcazar Energy, said at Belgrade Energy Forum that construction activities for some projects would start as early as this year

two solar power plants egesa enerji vojvodina

Turkish Egesa Enerji to build two solar power plants in Serbia’s Vojvodina province

30 May 2025 - Turkish company Egesa Enerji has launched a project to build two solar power plants in Vojvodina, with a total nominal capacity of 8.6 MW

Green for Growth Fund partnership Swedish International Development Cooperation Agency Sida

Green for Growth Fund launches partnership with Swedish International Development Cooperation Agency

30 May 2025 - GGF and the Swedish International Development Cooperation Agency are expanding green lending in the Western Balkans and the EU's Eastern Neighborhood