Promises of EUR2B Public Offerings In Next Two Years. How Many Will Materialize?

05.22.2011 ZF English

Under IMF pressure, the Economy Ministry is making further promises and says it is going to float stakes of 15% in Hidroelectrica and Nuclearelectrica each next year. However, the experience of the past two years shows that it takes years before promises materialize in effective listings.

The listing of 15% in the stock of Hidroelectrica and Nuclearelectrica, respectively, together with the sale of some stakes the state holds in Petrom (SNP.RO), Transgaz (TGN.RO), Transelectrica (TEL.RO) and Romgaz, all promised by the government for the 2011-2012 period, would turn the Bucharest Stock Exchange into one of the hottest capital markets in the region, considering the energy sector is currently the most fought-for in Romania.

The state's stock sales would amount to almost EUR1.9 billion, taking into account current valuations, from the bourse and analyst reports.

On top of this might come the sale by Russian-owned Vimetco of 21% in Alro Slatina (ALR.RO), the first stock sale by a foreign investor on the Bucharest bourse. The sale would drive the total share offering to over EUR2 billion.

However, despite the repeated statements from the Economy Ministry representatives and the IMF pressure, looking back there are few reasons for optimism.

Since 2005, the state has listed just two companies on the bourse: Transgaz and Transelectrica, in the wake of initial public offerings totally worth around EUR105 million.