Hidroelectrica shows IPO market wide open for good companies at fair value
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Hidroelectrica shows IPO market wide open for good companies at fair value

At €1.9 billion, international investors would happily have bought all of Europe’s biggest IPO since Porsche – even on the illiquid Bucharest stock exchange.

The floodgates may be opening for the IPO market – but not for London. Photo: Reuters

On Wednesday, Numis, the leading arranger of UK equity capital markets transactions, offered a troubling update on its coming results for the quarter to the end of June 2023.

It disclosed that revenue was below the run-rate for the two prior quarters, reflecting a deteriorating market backdrop across the investment banking industry, a prolonged period of exceptionally low deal volumes and the “effective closure” of the IPO market.

Well, closed in London it may be, but investors don’t have to look too far to see that the IPO market is wide open.

On the very same day, Hidroelectrica, Romania’s leading electricity producer and one of the largest hydropower companies in Europe, together with selling shareholder Fondul Proprietatea, priced its heavily oversubscribed €1.9 billion IPO at RON104 (€21) per share, implying a market capitalization of €9.4 billion.

This is a significant milestone for both Hidroelectrica and Romania
Bogdan Badea, Hidroelectrica
Bogdan Badea, Hidroelectrica_960.jpg

That was just above the mid-point of the RON94-RON112 indicated price range. The selling shareholder could probably have pushed even higher, after initial commitments of €450 million form three unidentified cornerstone investors, understood to be local pension funds, set the foundation for heavy demand from other Romanian institutional investors, local retail investors and then long-only global emerging market funds, frontier funds and industry specialists.


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