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Government approved on Wednesday the privatization of 51% of Electrica. Although initially, according to the statements of the members of government, the state would have had to obtain 300-390 million euro for the majority stake, a share will be sold at a minimum of 11 lei, 1 leu over the nominal value, and at a maximum of 13.5 lei.
“The minimum price offer approaches reality, while the maximum price makes the offer to be relatively expensive,” a broker told energynomics.ro.
We talk about the largest- ever listing in the capital market of Romania.
The state will attract a minimum of 435 million euro from this sale, according to the Minister responsible for Energy, Razvan Nicolescu. At a price of 13.5 lei, the maximum amount would rise to 543 million euro for the 177.18 million shares on sale.
“We talk about the largest- ever listing in the capital market of Romania. The company will be listed if we’ll get a minimum of 435 million euro. It’s an act of courage to try listing a pack of 51% in the stock market of Romania”, said Nicolescu, quoted by Mediafax.
He added that Electrica listing on the stock exchange is a way to encourage the domestic capital market, and is proof that the government commits to make the state-owned firms more transparent and improve their performance.
“It is a proof that the state currently is willing to continue privatization, but at a fair price – at a price that is advantageous for the state, because especially in the context of the latest developments, as Romania has improved its country rating, we are in a situation where we can sell and are willing to sell if the price is right,” he said.
Without taking into account any discounts which may be provided to retail investors, the offer is between about 1.949 billion lei (443 million euro) and 2.392 billion lei (543 million euro), considering an exchange rate of 4.4 lei for an euro.
The Minister also announced that next week he will be in London to promote the offer in the capital market and said he hoped the offer to be completed around June, 26 and the actual listing to start on July, 3.Sources recently said that the offer would be held between June 16 to 25.
Discounted Offer
The final selling price will be determined based on the portion of subscriptions in the institutional investors bracket, who can place orders at prices ranging anywhere between 11 lei / share and 13.5 lei / share. Retail investors will buy shares at a lower price and they will be granted a discount.
This would be the largest public offering ever deployed on Bucharest Stock Exchange (BSE), even the minimum price surpassing the previous offer by which the state last year sold 15% stake in Romgaz (SNG) for about 1.734 billion lei (about 391 million).
Valued at the lowest price, the entire company stands at 3.821 billion lei (869.3 million euro) while by maximum, the value is of 4.69 billion lei (1.066 billion euro).
The offer will have three brackets.
According to Minister for Economy, 85% of the shares offered for sale are for institutional investors and the remaining 15% is for retail investors (both large and small ones). The tranche intended for retail investors can be increased up to 22% of the shares if there is enough interest.
The retail tranche for the first 10,000 individuals there is a guaranteed purchase of a maximum 1,000 shares each, depending on the number of titles that have a placed order for subscription.
The Minister explained that small investors can buy between 250 and 1,000 shares, guaranteed, and after this threshold will receive a pro-rata distribution, depending on subscription level. Investors who subscribe in the first week for more than 1,000 shares, but less than 20,000 titles, will receive a 5% discount.
The offer is mediated by a consortium formed by BRD, Citigroup, Raiffeisen Bank, Societe Generale and Swiss Capital.
