Energy and the Stock Market

The Minister Delegate for Energy Razvan Nicolescu is very pleased with the recent successful listing of Electrica, one of Romanias largest electricity suppliers

Florentin Căpitănescu, 27.06.2014, 13:23

The Government’s decision to take Electrica public, by listing 51% of its shares on the stock market, has proven an audacious and successful move, economic analysts have argued. Experts also say the Government was under a lot of pressure, considering its failed attempts over the last two years to privatize the Oltchim petrochemical power plant in Ramnicu Valcea, or the Freight Division of the Romanian Railway Company. The IPO for Electrica shares was successfully completed, with a subscription rate of over 200%.

Here is Energy Minister Razvan Nicolescu: “We are talking about the largest listing ever made on the Romanian capital market. It is basically our first successful privatization on the capital market. I am pleased with the public’s reaction and the subscription rate, most institutional investors are from Romania, the UK, the US and Poland”.

The state will continue to hold 49% of the shares and hopes to obtain some 460 million euros for the share package put up for sale. The money will remain with Electrica, the Government has said, and will be used for the company’s future investments in the coming years. Besides the obvious financial benefits, the authorities plan to turn the listing of Electrica into a model for the privatization of other state-owned companies, hopefully in the near future.

Minister Razvan Nicolescu: “One of our main goals is to step up the performance and transparency of state-owned companies in the energy field. The fact that we have had the possibility to analyze the Romanian energy sector, its prospects in the big financial centers, that we have attracted new investors to Romania is already a good sign. At the end of this process, we plan to continue our efforts to take other companies public as well, perhaps the Oltenia Energy Complex or even Hidroelectrica”.

The public listing of Electrica is generally seen as a success, all the more so as local investors have generally taken up stock trading, which brings them larger profits than the interest rates bankers have been maintaining at very low levels.