THE "ELECTRICA" IPO Unrest on the tranche for institutional investors

• Did the EBRD buy in?

Market sources told us that the European Bank for Reconstruction and Development (EBRD) have allegedly invested 75 million Euros in the Electrica IPO.

The information had not been officially confirmed by the time the newspaper went to print.

Other sources confirm that the EBRD and the Romanian authorities have talked about the IPO of Electrica, but they claim that the bank has eventually decided not to get involved in the IPO, as it is planning a significant investment in the Romanian private sector.

Some of the market participants are saying that the rumor of the involvement of the EBRD is intended to raise more money from the institutional investors and to spark interest in Electrica SA because the authorities aren't happy with how the IPO is going so far on the tier for institutional investors.

"The authorities have decided to allocate 5% of the tier for institutional investors to the small and big investors. This shows that 5% of the 85% tranche that was allocated to the institutional investors has not been subscribed", our sources say.

The road-show for the IPO of Electrica began on June 17th, after the delegate minister for Energy, Răzvan Nicolescu, together with managers of the company and with representatives of the underwriting union talked to EBRD officials in London about the prospectus of Electrica, especially the corporate governance rules that will be implemented in the company after the listing, according to a communiqué sent to our editors.

At the time, minister Nicolescu said: "We have expressed our wish and confidence that the EBRD would be a long term partner of the Romanian state in the shareholder structure of Electrica and that, through its vast experience, it would support us in a good implementation of international corporate governance standards. Moreover, we are hoping that this IPO will promote Electrica and, implicitly, Romania as a good destination for business, stable and predictable for making investments".

The authorities have also met funds as well as investment banks and other concerned investors.

• Clarification

According to the amendments to the prospectus of the IPO, on the date of the allocation, the Company will reallocate 5% of the total number of the shares on sale from the Tier for Institutional Investors to the Tiers of Small and/or Big Investors, if the latter two have a higher rate of subscription then the Tier of Institutional Investors.

Thus, given the aforementioned circumstances, it becomes certain that the company will transfer between the tiers a block of 5% and not "of up to 5%" as stipulated in the initial prospectus.