Hidroelectrica likely valued at EUR 9.4 bln under heavily oversubscribed IPO

The initial public offering (IPO) of Romanian hydropower company Hidroelectrica (BSE: H2O) was priced at RON 104 per share, which is in the upper half of the price interval (RON 94-112), implying a valuation of EUR 9.4 billion for the whole company.

At this price, Fondul Proprietatea (BSE: FP), the selling shareholder, will get around RON 9.3 billion (EUR 1.9 bln) for its 19.94% stake in the company, if it also sells the additional shares over-allotted for stabilization purposes.

“The Offering was oversubscribed multiple times at the Offer Price, with strong investor demand from investors globally, including from Romania,” reads the company’s official announcement.

The demand was especially high on the retail tranche, where the orders summed up 55.7 billion shares (at the maximum price of RON 112), which represented 475% of the number of shares initially allotted for this tranche.

“We are happy to see the strong investor interest which has driven a successful outcome of Hidroelectrica’s IPO. This is a significant milestone for both Hidroelectrica and Romania, which will support our company’s long-term development,” stated Bogdan Badea, Hidroelectrica’s CEO.

Given the high demand, the company and selling shareholder jointly decided to re-allocate shares from the Institutional Tranche to the Retail Tranche.

The retail investors were allotted 17,941,635 shares, representing 20% of the shares sold in the IPO. The pro rata allocation factor calculated for the retail investors tranche is 0.32, which means that the retail investors will get 32 H2O shares for every 100 shares subscribed in the IPO.

Moreover, the retail investors who subscribed in the first five days of the IPO will get a 3% discount to the final price and will pay RON 100.88 per share.

On the institutional tranche, a group of three cornerstone investors purchased RON 2.24 billion (EUR 454 mln) worth of shares based on an agreement signed before the IPO started. These investors will own 4.78% of Hidroelectrica’s total number of shares.

The settlement of the transaction will take place on July 10 and the first day of trading on the Bucharest Stock Exchange will be July 12. The H2O shares will be included in the BET index on their first day of trading, according to a decision of the BSE board.

Citigroup Global Markets Europe, Erste Group Bank, Jefferies and Morgan Stanley Europe are acting as Joint Global Coordinators in connection with the Offering. Banca Comerciala Romana, Barclays Bank Ireland, BofA Securities Europe, UBS Europe, UniCredit Bank and WOOD & Company Financial Services are acting as Joint Bookrunners. Auerbach Grayson, BRD - Groupe Société Générale, BT Capital Partners and Swiss Capital are acting as CoLead Managers (together, the "Underwriters").