Romania's Electrica raises EUR 444 mln via IPO in Bucharest and London

Romania's state owned electricity distributor Electrica aised around EUR 444 million via the recently closed initial public offering (IPO), which was two times oversubscribed. The IPO, which consisted in selling shares on The Bucharest Stock Exchange and global depository receipts (GDRs) on the London Stock Exchange, resulted in a price of RON 11 per share (the equivalent of some EUR 2.5 per share) and USD 13.66 per GDR. This values the whole company at EUR 870 million, which makes it the sixth largest Romanian company listed on the Bucharest Stock Exchange. This IPO price is at the bottom of the price range the Romanian Government set for this IPO. The maximum price was RON 13.5 per share or USD 16.63 per GDR. One GDR stands for 4 Electrica shares. Still, this was a success given the competition with 22 other ongoing IPOs, some of which failed, according to the state’s representatives. “This is the largest IPO so far in Romania, and the record funds will be used for investments,” said the Minister Delegate for Energy Răzvan Nicolescu. The demand for Electrica shares was higher on the individual investors tranches, which were strongly oversubscribed compared to the institutional tranche. The tranche for large individual investors, which was set in the prospectus at 8 percent of the whole offer (some 14.175 million shares) was 8.5 times oversubscribed. On the small investors’ tranche, where the maximum subscription was 20,000 shares, the total demand was 42.24 million shares, 3.4 times higher than the number of shares initially allotted, which represented 7 percent of the offer (12.4 million shares). This prompted Electrica and the representatives of the Government to use the option they had, according to the IPO prospectus, to increase the number of shares allotted to individual investors by 10.63 million shares, which were taken out from the institutional investors’ tranche. Thus, individual investors got 21 percent of the shares in the IPO and institutional investors got the remaining 79 percent. Citigroup Global Markets, Raiffeisen Bank Romania and Societe Generale acted as global coordinators and joint bookruners, BRD-Goupe Societe General was local manager and Swiss Capital was distribution agent for the IPO. The intermediaries will share a EUR 12.3 million fee, which is 2.77 percent of what the company raised. Total costs related to the IPO are some EUR 15 million. (the amount raised was of RON 1.95 billion; the exchange rate used for the calculation was RON 4.388 for EUR) Andrei Chirileasa, andrei@romania-insider.com