Largest RO investment fund says bidding for CEZ assets would hurt Hidroelectrica’s IPO

Romanian power producer Hidroelectrica’s plans to bid for the assets put up for sale by Czech utility group CEZ in Romania would endanger the listing of the company scheduled for September 2020, argued Johan Meyer, CEO of Franklin Templeton Investments and fund manager of Fondul Proprietatea, the biggest investment fund in Romania, which holds a 20% stake in Hidroelectrica.

Meyer also renewed his arguments against combining Hidroelectrica with assets that generate lower yields.

"Embarking on the bidding process for CEZ assets, involving the acquisition and integration of a very different group of assets, will throw any listing process into complete chaos. Investors are not interested in complicated prospects. They want to know exactly what they buy and what will happen, they do not want to get into a situation where […] they do not know what their return will be," he said, quoted by Ziarul Financiar.

Furthermore, the transaction would move the management’s focus from the listing, a process that requires much effort anyway, according to Meyer.

In response to the question whether entering a new market, that of energy distribution, would not increase the value of the company in the future, Johan Meyer reiterated that "CEZ's portfolio of assets is very different from the assets in Hidroelectrica’s portfolio and generates lower yield compared to the existing assets of Hidroelectrica", and that the combination of assets would dilute Hidroelectrica’s value as a "pure hydropower company".

(Photo courtesy of the company)