Electrica Shares Listed on the London Stock Exchange

The shares of Electrica electricity distribution company are now being traded on the London Stock Exchange.

Corina Cristea, 04.07.2014, 13:36

After an two-times oversubscribed IPO, the shares of Electrica are now being traded on the Bucharest and London stock exchanges. The electricity distribution company attracted 444 million Euros through the IPO in June, and the state has transferred to private investors a share package accounting for 51% of Electrica’s total shares.

“We believe that attracting private investors by listing the main distributor of electricity in Romania will help increase Electrica’s transparency and effectiveness, with a positive impact on both its profitability and end consumers’, the Minister Delegate for Energy Razvan Nicolaescu has stated. On Friday he attended alongside Prime Minister Victor Ponta the start of trading operations on the London Stock Exchange.

The Electrica bid, the largest to have ever been run though the Romanian Stock Exchange, was characterized by several positive aspects, according to specialists with Tradeville brokerage house, such as an IPO oversubscribed two times and the introduction of guaranteed subscriptions. However, according to the same specialists, there have been some negative aspects as well, such as no discounts for the guaranteed installments and the publication of the prospectus report just one day prior to the start of the IPO.

According to a report drawn up by Tradeville brokers, the shares of Electrica have a growth potential of 15% as compared to the price set for the initial public offering, namely 11 lei per share. 85% of the share package listed on the stock exchange have been offered to companies, the rest of 15% being accessible to natural persons, as small investors. The state wants the money to stay in the company, for investments that Electrica needs in the coming years.

Electrica is the second Romanian state-owned company listed on both the Bucharest and the London Stock Exchanges after Romgaz. The listing of Romgaz on both stock exchanges had been announced for November 12th, from the very launch of the public offering, under which the state sold 15% of the shares of that producer of natural gas. Investors bought 36% of Romgaz’s shares as deposit certificates, which were listed on the London stock exchange. The other 64% have been bought directly as shares traded on the Bucharest Stock Exchange. According to analysts, increasing the number of companies listed on the Bucharest Exchange is instrumental to attracting a larger number of investors. At the same time, this might boost private companies’ confidence that stock market listing is a very good alternative for funding development projects.