Electrica IPO, at the end. Subscription exceeds 200 percent.

Electrica has successfully carried out its initial public offering with an oversubscription of 200 percent, Razvan Nicolescu, the Minister Delegate for Energy, today announced during a press conference, according to Mediafax. He also said that the Selling Syndicate is considering the opportunity of redistributing part of the equities allocated to institutional investors towards retail investors so as to possibly supplement the share of 15 percent initially assigned to 20 percent of the 177.2 million equities available. These shares represent 105 percent of the shares in issue prior to the registration of capital increase and 51.2 percent of the shares in issue upon completion of capital increase, making the offering the biggest ever run on the Bucharest Stock Exchange.

“The subscription target was exceeded – oversubscription by 200 percent. Today I asked the Selling Syndicate, given the retail offer, to consider the possibility of increasing the share allocated to the retail segment, which was 15 percent. The plan is to provide over 20 percent to Romanian retailers”, said Nicolescu, quoted by the newswire.

Provided the Selling Syndicate will decide to supplement the share granted to retail investors, as Gabriel Dumitrascu, the Head of the General Directorate for Privatization and Management of Stakes in Energy held by the State, is expecting, the share for institutional investors will be reduced from 85 percent to 80 percent of the equities.

Nicolescu further revealed that most institutional investors originate from Romania, Poland, the United Kingdom and the United States. Dumitrascu detailed that 25 percent of these subscriptions were placed by Romanian investors – pension funds and, a premiere, SIFs, institutional investors located in the UK account for 23 percent, while those from Poland and the US subscribed for 17 percent and 13 percent, respectively, of shares.

He also saluted the evolution of the IPO, highlighting Electrica’s performance in the context of another 22 IPOs ongoing in the same period.            

“There was a hostile environment even from the first day of listing. The 7 percent tranche for small retail investors was allocated over 12.4 million shares. It was oversubscribed – over 42 million subscriptions, of which 8.5 million were in the guaranteed tranche which allowed up to 10 million equities. The remainder includes subscriptions in the open tranche. Large investors had a quota of 8 percent of the offering, 14.1 million shares which generated a demand of over 120 million. The subscription rate doubled in the last day”, he explained, as per Mediafax.

Dumitrascu also mentioned that Electrica’s shares achieved an average price compared to shares of similar companies, without disclosing an amount, though, as it is subject to the definitive allocation of shares.

Via this IPO, the Ministry of Economy which is in control of Electrica sought to transfer the majority stake to private investors, aiming to raise about 2 billion lei, amount which will be destined to investment projects, especially in the distribution sector. The offering launched on June 16 and closed on June 25 followed the strategy firstly adopted by Romgaz last year and allowed subscriptions for shares either in the form of shares, to be later traded on the Bucharest Stock Exchange or in the form of Global Depository Receipts to be traded on the London Stock Exchange, one GDR representing an interest in four shares. 

With a price range of 11 lei to 13.5 lei per share (13.55 dollar to 16.63 dollar per GDR), the offer was structured on three tranches:  small retail tranche which was allocated 7 percent of total shares, large retail tranche (8 percent) and institutional investors tranche which was assigned 85 percent of the available shares.

The effective listing on the BSE and the LSE is expected to start on July 3, 2014. The Selling Syndicate comprises Citigroup Global Markets Limited, Raiffeisen Bank S.A., Societe Generale Corporate and Investment Banking, BRD Group Societe Generale S.A. and SSIF Swiss Capital.

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).