Exclusive-Romanian fund Fondul to list hydropower producer Hidroelectrica – minister

BUCHAREST (Reuters) – Romanian fund Fondul Proprietatea will list at least 15% of state-owned hydropower company Hidroelectrica in Bucharest “as soon as possible”, without waiting for the government to join in, Energy Minister Virgil Popescu told Reuters.

Romanian Energy Minister, Virgil Popescu, answers questions during an interview with Reuters, in Bucharest, Romania, January 13, 2022. Inquam Photos/Octav Ganea via REUTERS

Romania committed last year to list 15% of Hidroelectrica by June 2023 as part of targets agreed with the European Union for its post-pandemic recovery and resilience package.

Fondul owns 20% of Hidroelectrica and Romania holds 80% but parliament introduced a two-year ban in 2020 on government sales of shares in state-owned firms, arguing it was against the national interest as the pandemic could depress share prices.

The government had been focused on selling some of its shares, so Popescu’s comments indicate a shift in strategy to speed up an initial public offering (IPO).

“The parliament ban does not allow us to launch the IPO, but we support the listing of Fondul’s entire stake or a part of it, at least 15% on the Bucharest Stock Exchange,” Popescu told Reuters in an interview. “We will vote in favour.”

Fondul portfolio manager Johan Meyer told Reuters this week that the fund’s priority was to list Hidroelectrica.

“Our primary objective is to deliver an IPO for Hidroelectrica and to do it as soon as possible because the company is in a great position to benefit from being listed on the Bucharest Stock Exchange,” Meyer said.

He said the amount of its stake on offer would be determined by market interest and conditions.

Hidroelectrica, which came out of insolvency in 2017, supplies nearly 30% of Romania’s electricity with green energy from some 200 hydroplants.

Fondul, which is run by investment manager Franklin Templeton, was set up as a fund to compensate Romanians for assets seized under communism and it holds minority stakes in a string of state firms.

The fund is worth $3.1 billion and its Hidroelectrica stake accounts for more than half of the total with a value of $1.97 billion.

Meyer said the state had left it up to minority shareholders to take listings forward because of the moratorium, which the current government has failed to overturn in parliament.

He said Fondul has already secured approval in principle to list its stake in salt producer Salrom.

“We can use a similar approach with other companies in our portfolio,” he told Reuters.

With a stock market capitalisation of about $50 billion, the Bucharest bourse ranks among the smallest in central and eastern Europe and badly needs liquidity.

Meyer said the moratorium was unfortunately restrictive.

“Two years have passed during which lots of progress could have been made towards attracting new investment into the Bucharest Stock Exchange,” he said.

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