Electrica IPO, already oversubscribed

Romania’s biggest initial public offering has been oversubscribed prior to the scheduled closing on June 25, according to Dana Mirela Ionescu, head of the Capital Markets Department within Raiffeisen Bank (one of the agents of the IPO), who was quoted by Bloomberg.

Ionescu said that the offering for 51.2 percent of the share capital held by the electricity distributor and supplier has generated high interest among both local and foreign investors, attracting 13,700 subscriptions from companies and individuals two days before completion.

“We have high interest for this offering from both local and international investors from all over Europe and the U.S.”, Ionescu stated, as per the mentioned source. “This IPO has also managed to attract new investors, as we see from the number of subscriptions”, she added.

It is, therefore, confirmed the prediction made last week by Razvan Nicolescu, the Minister Delegate for Energy, who said that he expects that the IPO will get full subscription no later than June 23.

The offering launched on June 16 comprises about 177.2 million new shares in the form of shares and with corresponding Global Depository Receipts to be traded on the London Stock Exchange, one GDR representing an interest in four shares. These shares account for 105 percent of the existing capital of Electrica in which the state will preserve only a minority stake (48.8 percent) unlike the other state-owned companies which run public offerings and which remained under its control.

With the IPO oversubscribed, the Romanian state should raise about 2 billion lei (some 435 million euro), at least, considering the price range - 11 lei to 13.5 lei per share (13.55 dollar to 16.63 dollar per GDR).

From the total shares available in the offering, 85 percent are for large investors, while the remainder of 15 percent is assigned to retail investors, either small or large, yet this allocation is not definitive, allowing a redistribution to supplement the shares up to 20 percent for the second category. 

Subscriptions in the small investors’ segment must comprise of at least 250 shares and a maximum of 20,000 shares at the upper price range, 13.5 lei. Large investors, though, are restricted only as regards the minimum threshold which was set to 20,001 shares and 5,001 GDRs, the price being 13.5 lei/share and 16.63 dollar/GDR, respectively.

Institutional investors can subscribe for as many shares as they want, without restrictions as concerns the price, too, therefore subscriptions can be placed even for 11 lei and can range up to 13.5 lei for shares (13.55 – 16.63 dollar/GDR).

As happened with Romgaz’s IPO last fall, which brought approximately 1.7 billion lei to Romania’s state budget, there is a 5 percent discount for small retail investors who acquired between 1000 and 20,000 shares by June 20. However, they only receive a guaranteed allocation for subscriptions which cumulatively do not exceed 1,000 shares subscribed on a ‘first come, first served’ basis up to a total of 10 million shares.

The effective listing on the BSE and the LSE is expected to start on July 3, 2014. 

Citigroup Global Markets Limited, Raiffeisen Bank S.A., Societe Generale Corporate and Investment Banking, BRD Group Societe Generale S.A. and SSIF Swiss Capital act as agents of the IPO.

Electrica is the leading distributor and supplier of electricity in Romania. The group's core business segments are the supply and distribution of electricity, in the first area operating through Electrica Distributie Muntenia Nord S.A., Electrica Distributie Transilvania Sud S.A., Electrica Distributie Transilvania Nord S.A. and the maintenance services company Electrica Serv. The supply segment operates through Electrica Furnizare and supplies electricity to consumers both on the regulated electricity market (in the regions where the distribution subsidiaries of the group operate) and on the competitive electricity market (throughout Romania).

The group's electricity distribution business is the largest in the domestic market both in terms of volume of electricity distributed to users and number of users.  According to ANRE, the National Energy Regulatory Authority, in 2013 the Electrica’s distribution business accounted for 39 percent of the electricity distributed in Romania – some 16 TWh of electric power which was distributed to about 3.6 million users. The supply operations included a similar number of users (around 3.56 million) and 9.7 TWh which represents 22.1 percent of the electric power supplied in the country.

Last year, Electrica posted consolidated revenues of approximately 5.2 billion lei (over 1.15 billion euro), while EBITDA amounted to 749 million lei (some 167 million euro).