The initial public offering (IPO) of state owned electricity holding Electrica starts today, June 16, and will end on June 25.

The company sells 51 percent of its own shares (some 177.18 million shares) at a minimum price of RON 11 and a maximum price of RON 13.5. It aims to raise a minimum of EUR 443 million, which makes it the largest IPO ever in Romania. The maximum amount which can be raised is EUR 543 million.

Retail investors have two tranches where they can subscribe. In the small tranche, which is 7 percent of the offering, they will have certain facilities. Subscriptions of up to 1,000 shares will be guaranteed while those who subscribe more than 1,000 shares will get a 5 percent discount, if they make their subscriptions in the first five days, but with a pro-rata allotment. The subscription price for retail is RON 13.5 lei. The maximum subscription is 20,000 shares. The large retail tranche is 8 percent of the offering and is for investors who subscribe more than 20,000 shares.

The final price of the offer will be set on the institutional tranche, which makes 85 percent of the total offer. Institutional investors will also be able to buy global depository receipts GDRs instead of shares. GDRs will be traded on the London Stock Exchange.

The Electrica IPO is managed by a consortium which is made of Citigroup, Societe Generale, Raiffeisen Bank Romania, BRD-SocGen and Swiss Capital. Subscriptions can be made through consortium members but also through Romanian authorized intermediaries.

The members of the consortium together with company and state representatives will go on a roadshow through the most important financial centers in Europe but also to New York and Boston, to promote the IPO and attract institutional investors.

In order for the offering to be successful all shares must be sold. The company will then be floated on the Bucharest Stock Exchange and the London Stock Exchange, starting July 3.

The state won’t get any money from this offering. The proceeds will be used to finance the company’s investments. The total costs of the IPO will be between EUR 15 million and EUR 18 million.

Andrei Chirileasa, andrei@romania-insider.com