THE BAD ORGANIZATION OF THE ELECTRICA ipo Bigger commissions only to make the BSE more unpopular

The execution of the "Electrica" IPO has been flawed, considering that the prospectus has seen changes just two days before the deadline.

The many mistakes in the figures presented in the report show the superficiality of the people who were in charge of the IPO and the disregard for the rigors of the stock market.

However, nobody is taking responsibility for the mistakes, even though the degree of professionalism should have been at its peak, given the fees charged in this IPO, as well as the fact that it was the biggest IPO so far on the Bucharest Stock Exchange.

That is to say nothing of the respect that names such as Citigroup, Raiffeisen Bank and Societe Generale Corporate & Investment Banking, the global bookrunners of the IPO should have engendered.

It is customary for the prospectus to be drawn up by the intermediaries, but they do not take responsibility for the contents of the document.

Thus, it is to be expected that the fees, commissions and the total expenses owed by the company, estimated to range between approximately 67 and 80 million lei, will be collected anyway, regardless of the lack of rigorousness in the execution of the IPO.

Inaccurate prospectus, zero responsibility.

The Financial Oversight Authority also shirks any responsibility: "The seal of approval of a prospectus does not serve as a guarantee and does not represent any form of evaluation by the ASF of Romania concerning the opportunity, the advantages or disadvantages, the profit or risks derived from any transactions stemming from the acceptance of the offering which was approved; the approval decision only certifies the compliance of the prospectus when it comes to the requirements of the law and of the norms passed in its application".

It is a "boilerplate" text.

But the fact that the ASF certifies the compliance with the law is somewhat useless, if non-compliance with the law is punishable anyway.

The rebuttal to the criticism in the media concerning the exorbitant wages paid at the ASF has always been that the employees of the Financial Oversight Authority should be paid appropriately, in line with the responsibility that they carry.

It would seem that there is no reason for those wages to be so high, when it comes to IPOs at least.

What tops it all off is "The report of the independent auditor on the pro forma financial information" was modified through amendments, meaning that now, the auditor is reissuing the report based on corrected financial information.

In other words, the auditor also failed to spot the mistakes in the data from the start.

Paradoxically, "Electrica", which is paying all these specialists to take it public out of the very money of the future shareholders participating in the IPO, is the only one that carries a trace of responsibility for the accuracy of the information in the prospectus, but not for the entire document (see excerpt in the box).

The prospectus is the main document for providing information to investors.

The aforementioned superficial manner of the approach, added to the fact that the IPO was preceded by a pre-marketing period which was only aimed at certain investors, who received advance information, allows the suspicion that in fact, the intermediaries are deliberately making mistakes, leaving room for fraud.

Small investors have expressed their displeasure at the small number of shares that they were allotted, as well as the way the IPO was structured. Disregarding retail investors sends a serious message, and the IPO of "Electrica" seems to be yet another missed opportunity to grow that the stock market missed.

After the "elitism" of this offer, it makes no sense for the officials of the Bucharest Stock Exchange to complain that the market isn't popular enough.