Romania's Electrica IPO: Two tranches for retail investors, facilities for small individual investors

The initial public offering - IPO- of Romania’s state owned electricity distributor Electrica will have two tranches for retail investors, which make 15 percent of the total shares sold in the offer. The IPO starts on Monday, June 16, and will end on June 25, according to an official announcement. Retail investors will be able to subscribe at the maximum price on offer, RON 13,5 per share, but once the final price is set - based on subscriptions from large, institutional investors- retail investors, will be able to buy at that final price, which can be lower than the maximum at which they had subscribed. In this case, they will receive the difference in price back. The tranche for small retail investors will account for 7 percent of the total offering, while larger non-institutional investors will have 8 percent of the total shares. The largest tranche, which represents 85 percent of the offering, is for institutional investors. Small investors can subscribe between 250 and 20,000 shares at the fixed price of RON 13.5, which is the maximum of the IPO pricing interval. Larger retail investors will be able to subscribe more than 20,000 shares, or more than 4,000 Global Depository Receipts (GDRs) which will be traded on the London Stock Exchange. One GDR stands for four Electrica shares. The price for the large retail investors is also RON 13.5 per share or USD 16.63 for GDR. Only institutional investors can subscribe at any price of the IPO interval, which is RON 11 to 13.5 for shares and USD 13.55 to USD 16.63 for GDRs. Based on their subscriptions the final price of the offering will be set. This final price will be applied to retail investors and if it will be lower than RON 13.5, investors will be paid back the difference. Also, small retail investors will have their subscriptions guaranteed up to 1,000 shares and for subscription larger than 1,000 shares they will get a discount of 5 percent, according to Mediafax. For large retail investors there will be no discount and no guaranteed subscriptions. Electrica sells 177.19 million shares which represent 105 percent of its current share capital or 51 percent of its future capital, after the IPO. The IPO will be successful is subscriptions will be at least 100 percent of the number of shares offered. The company could cash in between EUR 435 million and EUR 533 million. Local managers for the Electrica IPO are Raiffeisen Bank Romania, BRD Groupe Societe Generale and Swiss Capital, while the international book-runners are Citigroup and Societe Generale. Andrei Chirileasa, andrei@romania-insider.com