Romania Plans to Raise $589 Million From Electrica Sale

Romania wants to raise at least 1.95 billion lei ($600 million) from the sale of a majority stake in power distributor Electrica SA in Bucharest and London in the country’s biggest initial public offering.

The Bucharest-based government set a price range of between 11 lei and 13.5 lei for each share, while interested investors can subscribe to the sale between June 16 and June 26, Energy Minister Razvan Nicolescu said in Bucharest today.

“I am convinced that it will be a successful share sale and that the private capital we are attracting will be used by the company to fund the much-needed energy infrastructure investments,” Prime Minister Victor Ponta said before the government meeting.

The second-poorest European Union member has been selling stakes in state-owned companies to cover its budget deficit and ease the government’s influence in the economy. The plan is part of Romania’s pledge to the EU and the International Monetary Fund, which has approved a third consecutive loan accord for Romania since 2009 to shield the Balkan country from market turbulence.

The former communist country raised 1.7 billion lei by selling a minority stake in natural-gas producer Romgaz SA in November, its biggest initial public offering so far.

“Once successfully completed, the Electrica sale will be the biggest share offering in Romania’s history,” Nicolescu told reporters.

London GDRs

Romania will offer about 177 million new Electrica shares in Bucharest and via global depository receipts in London, according to a May 30 regulatory statement. Eighty-five percent of the sold shares are designated to institutional investors, according to Nicolescu. The remaining tranche can be subscribed by retail investors and may be increased depending on the interest, he said.

The state, which now fully owns the power distributor, will cut its stake in the company to about 48.8 percent after the sale.

The government is targeting total demand for the Electrica stake at as much as $1 billion, including an over-subscription, according to a draft law posted on the Energy Ministry’s website.

Romania also sold minority stakes in nuclear-power generator Nuclearelectrica SA and Transgaz SA last year and grid operator Transelectrica SA in 2012.

To contact the reporter on this story: Andra Timu in Bucharest at atimu@bloomberg.net

To contact the editors responsible for this story: Balazs Penz at bpenz@bloomberg.net James M. Gomez

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