Bucharest Stock Exchange Posted
On June 6th, 2023, FEAS Member Bucharest Stock Exchange announced about New IPO by Hidroelectrica company. Hidroelectrica SA, the leader in electricity production and the main provider of technological services needed in the National Energy System, has successfully concluded the largest initial public offering (IPO) ever made on the Bucharest Stock Exchange (BVB).
“With a value of more than $ 2bn, for almost 20% of the company shares, Hidroelectrica’s IPO success entered the history of the capital market. This comes as Hidroelectrica is the largest company ever listed on the Bucharest Stock Exchange, but also because its IPO was the largest offer carried out in Europe in 2023 and, at the same time, entered the Top3 worldwide this year up till now”, – says Mr. Hanga.
Read the full interview below.
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FEAS Secretariat talked with the President of Bucharest Stock Mr. Radu Hanga to know more details about the largest IPO at Bucharest Stock Exchange.
1. How was the IPO process and what is your suggestion to the companies that are thinking about going for an IPO in the future?
With a value of more than $ 2bn, for almost 20% of the company shares, Hidroelectrica’s IPO success entered the history of the capital market. This comes as Hidroelectrica is the largest company ever listed on the Bucharest Stock Exchange, but also because its IPO was the largest offer carried out in Europe in 2023 and, at the same time, entered the Top3 worldwide this year up till now.
The IPO was carried out by Fondul Proprietatea, that sold all its shares in Hidroelectrica, and it was addressed both to institutional investors and retail investors. During the 8 days of the offer, retail investors placed over 52,000 subscription orders, with a value of almost $ 1.4bn. This amount is almost 5 times higher than the estimates from the launch of the offer and, at the same time, it is an impressive amount considering that we are only talking about retail investors, i.e. natural person investors, but also some companies that do not current such stock or bond transactions. We saw tens of thousands Romanians opening trading accounts which was like an avalanche coming over the brokers and they managed to accommodate them all.
The IPO was carried out in a complicated period both from an economic and geopolitical point of view, and it demonstrates that the Romanian stock market is developing, gaining in maturity and attractiveness. It also shows that investors, both local and international, are willing to commit impressive amounts of money when the stock market brings them an attractive opportunity.
From the perspective of local companies, Hidroelectrica’s listing sends the message that the Romanian capital market can provide visibility and access to the resources needed to support development. We are confident that the listings trend will rebound in the upcoming months.
2. How does the stock exchange plan to support and promote Hidroelectrica to investors?
We worked close to Hidroelectrica and Fondul Proprietatea and brokers even before the preparations for the IPO began. There were external and local conferences and meetings with international investors, very good mass media coverage since the first details of the IPO were unveiled. On the Romanian side, the media played an important role in promoting the IPO, not only those journalists that are specialized on capital markets, but also the general media, written, radio and TV.
A very bold promotion was the decision of BVB’s Indices Committee to include Hidroelectrica in BVB’s indices from the first day of trading, which was seen as a confidence signal in the success of the IPO, taken into consideration that the decision was taken by more than a month prior to the IPO.
We will continue the promotion, not only for Hidroelectrica, but for the entire capital market, locally and abroad, by organizing investors conferences and one-on-on meetings.
At the same time, we continue to promote the IR best practices towards the listed companies, in order to be more appealing to investors, international and local. In this endeavor, BVB has alongside partners such ARIR (The Romanian Investors Relations Association) and Envisia Boards of Elite,
3. Can you discuss the listing process for the new company, including any requirements or criteria that had to be met?
Hidroelectrica came to the market with a market capitalization of about $ 10.4bn, a free float market cap of more than $ 2bn, while the free float is 19.94%.
Due to the large value of the IPO, Hidroelectrica fulfilled the criteria related to the listing. The minimum criteria for listing on BVB’s Main Market are 3 years of existence, a market cap of EUR 1mn, a free-float of 25%, but this threshold can be lower depending on the value of the IPO.
Also, the IPO and the listing process were fast, in less than 3 weeks, which shows that all those involved in this transaction worked hard and smooth.
At the same, Hidroelectrica is a special case, as indirectly, it was present on the market through Fondul Proprietatea. Fondul held its stake in Hidroelectrica even from its creation. Due to this and the large value of the company and its free float, Hidroelectrica had a fast entry in BVB’s indices, as well as in FTSE Russell indices for Emerging Markets and MSCI indices for frontier market.
As we were expecting to have a flood or trading orders in the first trading day, we extended the preopening phase of the trading session from 15 min to 1 hour for Hidreoelectrica, in order to provide investors enough time to place their orders, or even to change them according to their strategy and the other orders placed. It proved a wise decision and everything went smooth both on BVB’s side, as on the brokers side.
More about the IPO: https://feas.org/ipo-calendar/