Electrica Goes Public

Financial experts say the decision to take public the state-owned electricity supplier Electrica, otherwise a profitable company, is not just a bold move, but a historic decision for the Romanian State.

Romanian Energy Minister Razvan Nicolescu said this would be the biggest listing ever on the Romanian capital market. Figures speak for themselves.

The state wants to sell the majority stake for at least 435 million euros. The money will support Electrica’s investment plans over the next few years.

The first subscriptions for the company’s IPO were filled on Monday, June 16, while the deadline is June 25.

Eighty-five per cent of the majority share package addresses institutions, while the remaining 15% can be bought by small investors.

Prices range between 2.5 and 3 euros per share.

In an attempt to make the shares more appealing, the state also offers certain discounts.

Investors buying between 1,000 and 20,000 shares will get a 5% discount.

Individual investors see the listing as a good profit-making opportunity and a chance to diversify their portfolio, given that bank deposit rates have gone down in recent years.

“Electrica is a highly profitable company. Last year it reported profits of nearly 70 million euros. So investing in Electrica can be a genuine alternative for natural persons, considering that bank rates have dropped dramatically of late and that the inflation rate has hit a minimum low.

"Therefore I expect many Romanians to invest in order to diversify their portfolios” the president of the Bucharest Stock Exchange Lucian Anghel explained.

The listing however has one drawback.

The company has double charged its clients for green certificates, and the National Energy Regulatory Authority has decided that 11 million euros in undue revenues should be fully returned to home users.

The money will be refunded gradually, by slashing electricity supply charges.