Romania May Raise EU435 Million in Country’s Biggest IPO

Romania will probably raise around 435 million euros ($592 million) from the sale of a majority stake in Electrica SA power distributor, the Black Sea country’s biggest share offering.

The average price for the shares sold in the Electrica initial public offering will probably be close to 11 lei per share, the minimum price set by the government, Gabriel Dumitrascu, head of the asset sale office in Bucharest, told reporters today. The final price will be announced after talks with sale managers, he said.

Romania has been selling stakes in state-owned companies to cover its budget deficit and reduce government influence in the economy. The former communist country raised 1.7 billion lei ($527 million) by selling a minority stake in natural-gas producer Romgaz SA in November.

“The fact that the offer is more than two times oversubscribed is gratifying considering the current market conditions,” Dumitrascu said. “The government is willing to continue its privatization program but not at any cost and the price range for Electrica is a good one.”

Romania’s benchmark BET stock was little changed at 6,854.37 points at 12:53 p.m. in Bucharest today. Fondul Proprietatea SA shares rose 0.6 percent to 0.8245 lei.

Free Float

Romania offered about 177 million new Electrica shares in Bucharest and via global depository receipts in London from June 16 to June 25. The government may increase the number of shares designated for retail investors to more than 20 percent of the total sale to secure the future free float of the shares, Energy Minister Razvan Nicolescu said today.

The sale is part of Romania’s pledge to the European Union 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 state, which now still fully owns the power distributor, will cut its stake in the company to about 48.8 percent after the sale.

Citigroup Inc., BRD-Groupe Societe Generale, Raiffeisen Bank Romania SA, Societe Generale SA and Swiss Capital SA are managing the offering.

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