Romania's Electrica brings IPO investors 7.7% gain in first day of trading

Romanian electricity distributor Electrica’s shares (BVB ticker: EL), which started trading on Friday, July 4, on the Bucharest Stock Exchange (BVB), closed the first day of trading at RON 11.25, which is 2.27 percent higher than the price for which the company sold its shares in the initial public offering (IPO), of RON 11. The day’s high was RON 11.26 per share, 2.36 percent above the IPO price, while the lowest price of the day was RON 11.04. A total of 5.35 million shares were traded in the first day, or 1.54 percent of the company’s capital. The total value of transactions was of almost RON 60 million (EUR 13.7 million), more than a half of the total volume of transactions registered on the BVB on Friday, which was EUR 26 million. Most Electrica shares were sold by individual investors who rushed to mark their profits, as they also benefited from a 5 percent discount to the IPO price. There were two facilities for small individual investors in the IPO. Those who subscribed less than 1,000 shares had their subscriptions guaranteed, so they got one share for each share they subscribed. Those with subscriptions larger than 1,000, but up to 20,000 shares, got a 5 percent discount to the IPO price. The discounted price was RON 10.45, which means that investors could mark profits of up to 7.7 percent in the first day of trading. Many were tempted to do so, as this is a substantial profit made in a three week period. For comparison, local banks now pay less than 3 percent annual interest rates for new deposits from clients. The Electrica IPO was the largest transaction of this kind ever on the local capital market. The company raised EUR 444 million for investment by selling 51 percent of its own shares on the Bucharest Stock Exchange but also on the London Stock Exchange, as global depository receipts (GDRs). After the first day of trading, Electrica has a market capitalization of EUR 886 million which makes it the sixth most valuable Romanian company listed on the BVB. Andrei Chirileasa, andrei@romania-insider.com