Romania’s stock market is gearing up for a swarm of new investors and record liquidity as the country’s largest electricity producer begins trading in Bucharest.
Hidroelectrica SA will kick off its bourse career on July 12 with a market value of roughly $10 billion. That’s after investment vehicle Fondul Proprietatea SA last week raised 8.1 billion lei ($1.8 billion) from the sale of a 17.3% stake in the utility. Retail investors took up a fifth of the shares on offer.
The oversubscribed initial public offering — Europe’s largest of the year — is a test for the Bucharest Stock Exchange, which has one of the lowest liquidity pools of any market in eastern Europe. Renewables producer Hidroelectrica is 80% owned by the Romanian state, which must be held for at least a year.
The Bucharest bourse will extend its premarket order period from 15 minutes to one hour on Wednesday to ensure Hidroelectrica’s debut goes smoothly. Normal trading will open as usual at 10:00 a.m. local time. Hidroelectrica will trade under the H20 ticker and have the fourth-largest weighting in Romania’s BET Index. It replaces aluminum smelter Alro SA in the benchmark index.
In an interview last week, Bucharest Stock Exchange Chief Executive Officer Adrian Tanase said he expected a surge in liquidity from the nation’s largest-ever listing, also predicting all-time high trading orders and volumes on the day.
Erste Group Bank AG is acting as stabilisation agent on behalf of stabilization manager Citigroup Inc. It may use the remainder of Fondul’s stake — which was about 20% — in Hidroelectrica to help support the trading price if required, according to a filing. Bucharest Stock Exchange said trading in Hidroelectrica will take place in accordance with its volatility interruptions mechanism.
Some fund managers are forecasting gains on Hidroelectrica’s reference price of 104 lei a share. “I expect share prices to rise on the first day if there’s no huge drop in sentiment, given especially the retail over-subscription,” said Eszter Lokietek, fund manager at OTP Fund Management.
Attila Gyurcsik, Hungary-based CEO of Accorde Fund Management, who bought into the IPO, said last week that he expected it to “be worth buying more of the shares” in Hidroelectrica since pricing was attractive.
Proceeds from the sale of Fondul’s stake in Hidroelectrica will be distributed to its shareholders, which include pension funds, in the coming months. Fondul’s net asset value will decrease after the Hidroelectrica deal and it plans to start asking shareholders for flexibility to start making new investments to boost its NAV, Bloomberg reported previously.
© 2023 Bloomberg
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