Fondul Proprietatea reminds Hidroelectrica IPO should be on Romanian Govt.’s agenda

Romania’s authorities have now a window of opportunity to use the political consensus following the formation of a new ruling coalition and go ahead with the planned IPO at the hydropower group Hidroelectrica, Fondul Proprietatea (FP) argues in a column published by Ilinca von Derenthall, Chairman of the Committee of Representatives.

FP has repeatedly argued for the listing of Hidroelectrica ‘s shares and has never hidden that it has a (legitimate) interest in it, as the energy company holds the largest share in its portfolio: some 60% as of September 2021.

The share held by unlisted companies in FP’s portfolio was 79% at that time - a share that would create operational difficulties to any fund manager.

But more than that, the listing of Hidroelectrica’s shares would bring benefits to a multitude of actors: the state (as a shareholder), the pension funds (allowing diversification), households (that would get access to better placement alternatives) and the local stock exchange that needs capitalisation and liquidity to be promoted to the status of an emerging market MSCI.

On the corporate side, a listed and supervised company can ensure decision-making transparency and good corporate governance, prevent arbitrary changes in boards and decision-making, and provide a chance for long-term development strategies.

The company is ready to start the final preparation for the listing, which could be completed in the first half of this year and has the potential to become the most successful listing of the Romanian state, von Derenthall argued, according to Ziarul Financiar.

The economic outlook has changed radically since Romania banned in 2020 for two years under Law 173/2020 the sale of state assets stakes in financial and non-financial companies. It remains unclear whether the law was justified at the time it was passed, but at this moment there is hard to argue for such restrictions.

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