Fondul Proprietatea will be able to list the shares of Hidroelectrica on the London Stock Exchange, where it expects to maximize the value of its 20% stake, but the volume of shares allotted for the foreign tranche under the GDR mechanism could not exceed 1/10 of the total package of shares offered under the IPO, under the revised regulation passed by the market supervisor ASF.

"We want more liquidity on the Bucharest Stock Exchange and not the London Stock Exchange. We don't want to export liquidity," an ASF representative told Profit.ro.

In its meeting last week, Romania's financial market regulator ASF amended Regulation 4/2013 in this regard - lowering the part of shares that can be traded under the GDR mechanism to 10% of the total offering, down from 66%. Thus, if FP puts up for sale a 15% stake, a 1.5% stake can be traded under the GDR mechanism in London or elsewhere.

Johan Meyer, CEO of Franklin Templeton Bucharest and portfolio manager of Fondul Proprietatea warned, argued that "the amendment threats the success of the IPO at Hidroelectrica and is a step back for the Romanian capital market," Bursa.ro reported.

As regards FP's expectations from the IPO, they have ballooned as the prospect of the IPO approached, reaching EUR 10 billion - up from EUR 3.8 bln in early 2017 - resulting in an average yield of over 20% (in euros) over the past five years not including the high dividend yields over the period.

The Green Deal and the war in Ukraine made the job of FP and the Government, bringing the value of the state-controlled company to a level not expected five years earlier.

Under these circumstances, sharing the benefits with other stakeholders (such as the pension funds, local individual investors, brokerage houses) and thus demonstrating loyalty would bring FP high ESG dividends at a time when this is an increasingly important metric for the investors. Possibly the price will be lower (compared to listing most of the shares abroad), but the utility calculated for the whole set of stakeholders - and not limited to the financial benefits of the FP shareholders - will be optimized.

Furthermore, the Association for Privately Managed Pensions in Romania and the Brokers Association assured that listing the country's major energy producer at the Bucharest Stock Exchange (BVB) only would bring greater benefits to most stakeholders.

iulian@romania-insider.com

(Photo source: Facebook/Hidroelectrica)