The initial public offering of Romanian state owned electricity distributor Electrica gathered more than 5,400 subscriptions from individual investors in the first day, totaling some EUR 26.7 million, according to data available on the local capital market.

Most of the subscriptions were recorded on the small individual investors’ tranche, where people rushed in to get the early subscription facilities, which are guaranteed allotment and 5 percent discount to the final IPO price. These two facilities do not cumulate.

Investors who subscribe up to 1,000 shares get guaranteed allotment, which means that if they request 1,000 shares they will get exactly 1,000 shares. This facility is however limited to a maximum 10 million shares. On Monday, June 16, 4,650 orders were placed on this segment for a total of 4.19 million shares. This means there are still some 5.81 million shares available for this facility.

The other facility that small investors can get is a 5 percent discount to the final price of the offer. For example, if the final price will be RON 12, they get the shares for RON 11.4. This applies for subscriptions which are not guaranteed, so larger than 1,000 shares, which are placed in the first five days of the offer, so up until Friday, June 20. Some 800 orders were placed on this segment, for a total of 3.96 million shares.

Both these segments are within the tranche for small investors, with subscriptions between 250 shares and 20,000 shares. The total number of shares allotted for this tranche is 12.4 million, which is 7 percent of the whole offer, which is 177.19 million shares. This means that the subscriptions made in the first day account for almost two thirds of the tranche.

On the large individual investors’ tranche, there were only 11 subscriptions for a total of 815,700 shares. Only orders larger than 20,000 shares are accepted on this installment and these investors get no facilities. This is why most likely investors will not rush on this tranche in the first week of the offering. Some 14.17 million shares, which account for 8 percent of the offering, are reserved for large individual investors.

Individual investors get to make their subscriptions at RON 13.5 per share, which is the maximum price of the IPO.  If the final price will be lower than his they will get the price difference back to their accounts.

Institutional investors get 85 percent of the offer and they can subscribe at any price between the minimum RON 11 per share and the maximum RON 13.5 per share. Based on their subscriptions the final IPO price will be set. This is why the book for institutional investors is closed in order not to disrupt the price forming process.

The Electrica IPO started on Monday, June 16, and will end on June 25. The company seeks to get at least EUR 443 million by selling a 51 percent stake. After the IPO, Electrica will be listed both on the Bucharest Stock Exchange and London Stock Exchange.

Andrei Chirileasa, andrei@romania-insider.com