The Fund said the state should analyze the risks of acquiring CEZ assets. It said the acquisition would not create value for its shareholders and would affect Hidroelectrica’s stock market listing and potential valuation, which would in turn hinder Romania’s chances to be promoted to emerging market status.
“Hidroelectrica is an extremely valuable company and a unique asset in Romania and the region, with significant profitability margins and a simple and sustainable business model focused on production of clean energy. This close to listing, it is not appropriate for Hidroelectrica to launch into a significant acquisition that could complicate this process,” said Johan Meyer, CEO of Franklin Templeton Investments and portfolio manager of Fondul Proprietatea.
He said involvement in a major deal such as acquiring CEZ’s local capabilities risk delaying Hidroelectrica’s IPO or dilute the company’s overall value.
Meyer added the transaction on the long term could annul Hidroelectrica’s hard-earned progress in terms of cost efficiency and profitability.
Hidroelectrica shareholders meet Thursday, June 25, to decide whether to approve and file a binding bid for the Romanian assets of Czech energy group CEZ.