Never before in its history has the Bucharest Stock Exchange seen such a high volume of shares put up for sale: the government is selling 51% in electricity distribution and supply company Electrica for RON1.9 billion to RON2.3 billion, while Fondul Proprietatea (FP.RO) was selling 4.99% in the country’s largest natural gas producer, Romgaz, worth RON644 million.
While Fondul Proprietatea has already found buyers for its Romgaz stake enticing them with a 5.8% discount in less than 12 hours from the announcement, Electrica is still looking.
Citi, Raiffeisen Bank, BRD and Swiss Capital brokers are touring the world’s biggest financial centers such as London, Frankfurt and New York to find buyers for Electrica shares. Electrica is the largest electricity distributor in Romania with 3.6 million clients.
“This is the biggest stock offering in the history of the stock market. If they can find buyers for these shares, it will be a very good performance for Romania and a good signal for investors,” said Nicolae Pascu, chief executive of asset manager STK Financial, which is managing more than RON70 million worth of assets.
“Foreign stock markets are at all time highs and bank interests at all time lows, so conditions are good.”
Romanians are keeping EUR30 billion in leu and euro bank deposits. Bank deposit interests hardly exceed 3% per annum, so this is one more reason for Romanians to look for better options for their savings. There are also the EUR3 billion to EUR5 billion of the wealthy Romanians managed by private banking departments of the major commercial banks. Moreover, mandatory pension funds have EUR3.5 billion assets, EUR318 million of which kept in bank deposits.
“I will subscribe quite a lot in the Electrica offering, as I did in the Romgaz offering, even though it is not attractive as Romgaz. I am an active stock market investor and am ready to participate to all the share offerings on the market,” said businessman Gheorghe Iaciu, who is also a stock market investor.
“ I join investment funds in private placements on the stock market, such as Romgaz where Fondul Proprietatea was the seller. The big share offerings are rare occurrences on the stock market and must not be missed.”
“Judging from the first signs, we are confident the Electrica offering will be successful,” said Marius Stoica, executive director financial markets with BRD and member of the consortium in charge of Electrica’s initial public offering.
The final price of the IPO will be decided by the subscriptions of the institutional investors, which have 85% of the 177 million Electrica shares up for sale allocated to them.
Some help in finding buyers came from the reinclusion of the country in the ‘investment grade’ category by rating agency S&P, which means foreign investors have a better perception of Romania.
Romgaz and Electrica shares are worth some EUR700 million and account for about one quarter of the EUR2.7 billion foreign investment the country attracted last year.
(English version by Loredana Fratila-Cristescu)