EBRD Buys 8.6% of Romania's Electrica in IPO

The European Bank for Reconstruction and Development (EBRD) said it has paid over 320 million lei ($100 million/73 million euro) for an 8.6% stake in Romanian electricity distribution company Electrica, in the country’s largest-ever initial public offering (IPO).

Electrica, the first Romanian company of which a majority stake is sold in an IPO, is simultaneously listed on the Bucharest Stock Exchange and the London Stock Exchange with a free float of 51.2%. Electrica earned 1.876 billion lei in the IPO after the payment of all issuance-related costs, which totalled 67 million lei, Raiffeisen Bank, which acted as a global coordinator and book runner for the offering, has said.

"The EBRD is investing in the company to help finance an ambitious investment strategy to upgrade the firm’s infrastructure. This will allow the electricity provider to offer its customers the same level of service as other – already privatised – market players," the EBRD said in a statement.

The bank’s funds will also help to make Electrica’s network more flexible in response to the recent increase in variable renewable energy capacity in Romania. The EBRD’s investment enables the bank to support a comprehensive plan to improve corporate governance, internal control systems and environmental management practices at Electrica. In this regard, the EBRD and Electrica’s management have signed a framework agreement for the implementation of a corporate governance action plan and an environmental and social action plan.

"We will work with the company towards the successful implementation of an ambitious set of measures to align its corporate governance with international standards," EBRD power and energy director Nandita Parshad said in the statement. "This will provide additional comfort and confidence to potential future investors.”

The transaction will also contribute to the development of local capital markets, providing an important benchmark for future listings and increasing market liquidity, the EBRD added.

The EBRD has so far invested approximately 6.7 billion euro across 360 projects in Romania and has further mobilised over 14 billion euro from other sources of financing.

Bucharest-based Electrica serves around 3.5 million customers in north-western, central, southern and south-eastern Romania.

Source: SeeNews