Electrica wants to raise at least 435 million Euros through the IPO

The IPO by which Electrica puts up for sale 51% of its shares will begin at prices ranging between 11 lei/share and 13.5 lei/share. The company wants to raise a minimum of 435 million Euros, Răzvan Nicolescu, the Energy delegate minister said yesterday.

Without considering the potential discounts which may be granted to small investors, the amount of the IPO ranges between 1.949 billion lei (443.3 million Euros) and 2.392 billion lei (544.1 million Euros).

The IPO by which Electrica is putting up for sale new shares representing 105% of its share capital will have three tranches, and investors can buy shares on the Bucharest Stock Exchange, as well as global depository receipts (GDR) on the London market.

85% of the shares put up for sale are allocated for institutional investors, and the remaining 15% are to be sold to retail investors. Răzvan Nicolescu mentioned that the tranche allocated to retail investors can be increased up to 22%, provided interest from that class of investors warrants it.

The Minister for Energy said: "We are talking about the biggest IPO ever on the Romanian stock market. The company will go public if it raises at least 435 million Euros. Trying to sell 51% of a company through an IPO on the Romanian stock market shows courage".

In his opinion, the IPO of Electrica is a way of stimulating the Romanian stock market, as well as proof of the Government's commitment to increase the transparency and improve the performance of state owned companies.

"The state is willing to continue the privatizations, but at a fair price, a price that would be good for the it as well, because, especially in the context of the latest developments, with Romania seeing an improvement in its sovereign rating, we can now sell successfully and we are willing to do so if the price is fair", the minister further said.

Răzvan Nicolescu said he hopes that the IPO would be concluded sometime around June 26th, and the actual IPO would take place on July 3rd. The IPO is set to take place between June 16-th - June 25th. The prospectus of the IPO will be approved by the Financial Oversight Authority (ASF) after the publication in the Monitor of the Government decision setting the price range for the IPO.

The final selling price will be set depending on the subscriptions on the tranche for institutional investors. Smaller investors will buy the shares at a somewhat lower price, as they will receive a discount as well.

On the small investor tier, the first 10,000 people will be guaranteed a maximum number of 1,000 shares, depending on the number of shares for which they placed a subscription order.

The minister explained that small investors will be guaranteed the ability to buy between 250 and 1,000 shares, and beyond that threshold they will receive a pro-rated number of shares, according to the rate of subscription. Investors that subscribe in the first week more than 1,000 shares, but fewer than 20,000 shares will receive a 5% discount.

The IPO is being intermediated by the consortium made up of BRD, Citigroup, Raiffeisen Bank, Societe Generale and Swiss Capital.

• Electrica - revenues of 5.2 billion lei in 2013 and 1.2 billion lei in Q1 2014

Electrica has generated a consolidated net profit of 243 million RON excluding minority stakes, for a revenue of approximately 5.2 billion RON in 2013 and a net consolidated profit of 60 million RON in Q1 2014, excluding minority stakes, for a revenue of approximately 1.2 billion RON in Q1 2014, according to a press release by Electrica.

The consolidated EBITDA was 222 million RON in Q1 2014, compared to 180 million RON in Q1 2013. The consolidated EBITDA was 749 million RON, 647 million RON and 275 million RON in 2013, 2012 and 2011, respectively.

The Electrica Group has recently undergone a reorganization, and following this process, the minority stakes in the Group have been transferred to a company which was recently created for the purpose of managing these assets, in which the State is a sole shareholder.

The distribution segment of Electrica is represented by Electrica Distribuţie Muntenia Nord, Electrica Distribuţie Transilvania Sud, Electrica Distribuţie Transilvania Nord and the energy services Electrica Serv and is limited, from a geographical point of view, to the Muntenia Nord, Transilvania Nord and Transilvania Sud regions. The distribution segment operates based on long-term concession contracts granted by the Ministry of the Economy, valid until 2054 and based on licenses issued by the ANRE, valid until 2027, which have an option for renewal for 25 more years. Electrica also provides services of maintenance and repairs for equipment and other services which are auxiliary to its distribution network and, to a lesser degree, to some third parties through the Electrica Serv energy services branch.

On the supply segment, the Group has two licenses issued by the ANRE, one for Electrica Furnizare and the other for Electrica, which are still valid for another seven years, and eight years, respectively. Electrica Furnizare provides electricity both to consumers from the regulated market (in the regions where the distribution branches of the Group operate), as well as on the competitive electricity market (all over Romania). Electrica is a Party in Charge of Balancing on the Romanian energy market.

According to the ANRE, in 2013 the Group distributed 16.1 TWh of electricity, representing 39% of the electricity distributed in Romania, to approximately 3.6 million users. Also, according to the ANRE, in 2013, the Group supplied 9.7 TWh of electricity, representing 22.1% of the volume of electricity supplied in Romania, to approximately 3.56 million end users.

The Group operates in highly and industrialized areas of Romania. On March 31st, 2014, Electrica ran a distribution network of 8389 km of high tension lines, 45,643 km of medium tension lines and 134,834 km of low tension lines.