After organizing a private auction to hire IPO consultants for its 20% stake in Hidroelectrica, Fondul Proprietatea concluded that the fees might be too high and selling the stake by direct negotiations might be a more effective option, according to Profit.ro. Or at least this is an option proposed by the Fund's manager Franklin Templeton to be voted by "the shareholders" - namely the state.

Such an option might be accepted by the institutional investors (pension funds) if they are invited but would block the individual investors - therefore, it is not very likely to get the Government's green light. It looks more like a negotiation strategy used by Franklin Templeton to convince Government to accept a dual listing.

The same private placement process would be employed by Fondul Proprietatea for the 49% stake in the salt company Salrom.

"The Fund's manager [Franklin Templeton] has estimated the cost of the potential transaction (including Hidroelectrica and Salrom) as part of the Fund's draft 2023 budget planning at a total value of RON 306 mln (EUR 60 mln) VAT included," according to a document quoted by Profit.ro.

The Fund estimates that the listing cost will result in a 2023 profit 16% smaller compared to 2022 (when it is expected at RON 263 mln). On the other hand, the Fund expects to collect in 2023 dividends of over RON 563 mln from Hidroelectrica's current year profit.

″[…] in order to have optimal flexibility in achieving the objective of obtaining a liquidity event at an attractive valuation, the Fund's manager is empowered to take all necessary measures for the sale of the Fund's participation in Hidroelectrica by any other means, including direct sale and, in case it is approved by the General Meeting of Hidroelectrica Shareholders, through a dual listing on an international market,″ the document also reads.

iulian@romania-insider.com

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