EBRD takes part in Romania’s largest ever IPO with an 8.6 per cent stake in Electrica

The European Bank for Reconstruction and Development (EBRD) has invested over RON 320 million (equivalent to €75 million) for an 8.6 per cent stake in Romania’s electricity distribution company S.C. Electrica S.A., as the firm moves towards privatisation in the country’s largest-ever 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 per cent.

S.C. Electrica S.A., with headquarters in Bucharest, serves around 3.5 million customers in north-western, central, southern and south-eastern Romania.

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 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.

Notably, 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.

Nandita Parshad, Power and Energy Director at the EBRD, said: “Electrica’s IPO – Romania’s largest to date – is a landmark transaction. Our participation demonstrates the EBRD’s commitment to supporting the government’s plans for increased privatisation of the energy sector. We will work with the company towards the successful implementation of an ambitious set of measures to align its corporate governance with international standards. This will provide additional comfort and confidence to potential future investors.”

Speaking during Electrica’s IPO marketing roadshow in London, Romania’s Energy Minister, Razvan Nicolescu, said: “We trust that the EBRD will be a long-term partner for Romania through Electrica, and will use its vast experience to support the implementation of international corporate governance standards in the company. We hope that this IPO will promote Electrica, and thereby Romania, as a good business destination, stable and predictable for investment.”

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 is the largest institutional investor in Romania. To date, the Bank has invested approximately €6.7 billion across 360 projects in the country. The EBRD has further mobilised over €14 billion from other sources of financing.

Source: EBRD press release