Retail investors place over EUR 100 mln into Premier Energy shares in the first three days of the IPO

Retail investors subscribed over 23.3 million shares in the first three days of the initial public offering carried out by energy group Premier Energy (PE). There were over 10,000 orders placed by retail investors, amounting to over RON 500 million (100 mln), as of Friday, May 10, at 15:15.

The Premier Energy IPO is the first major IPO taking place on the Bucharest Stock Exchange after the Hidroelectrica (H2O) IPO in June 2023, which was the biggest listing in Romania’s history.

Premier Energy and its majority shareholder Emma Capital are looking to draw up to EUR 160 million from BVB investors through the sale of new and existing shares. The majority of money raised in the IPO will go into the company through a capital increase and will finance the group’s development plans in Romania.

Premier Energy’s IPO has stirred high interest among investors on the Bucharest Stock Exchange due to several factors:

Diversified portfolio in the energy sector

Premier Energy is one of the fastest-growing players in the energy sector in Romania and Southeastern Europe (SEE) with a diversified portfolio, which includes gas distribution assets in Romania, electricity distribution in Moldova, and renewable energy assets in Romania. The group has accelerated its expansion recently with the acquisition of CEZ Vanzare, one of the biggest electricity suppliers in Romania, and new acquisitions of renewable energy assets.

Attractive valuation compared with BVB peers

The pricing of Premier Energy’s IPO is also attractive when compared with the valuation of energy companies listed on the Bucharest Stock Exchange. Considering the maximum IPO price of RON 21.5 and the maximum amount of sales that could be sold in the IPO, Premier Energy could be valued at EUR 562 million, which stands for a P/E ratio (price/earnings) of 7.1 based on last year’s net profit of EUR 79 mln. Factoring in the impact of the CEZ Vanzare acquisition, the P/E ratio is even lower at 5.65, based on a pro-forma net profit of EUR 99.5 mln. Also, the P/B ratio (price/book value) post-IPO is close to 1, which means that the company’s valuation is almost equal to the net value of its assets.

The top 5 energy companies listed on the Bucharest Stock Exchange (Hidroelectrica, OMV Petrom, Romgaz, Nuclearelecrica and Electrica) are trading at an average P/E ratio of 7.95 and an average P/B ratio of 1.49 considering their profits for 2023.

Discount for retail investors