Franklin Templeton Says Romania Could Attract EUR3.5B By Listing Nuke, Hydropower Producers

04.12.2011 By Andrei Circhelan

Romanian state-owned power producers Hidroelectrica and Nuclearelectrica could draw funds worth a total EUR3.5 billion when floating stock on the bourse, Monday said Greg Konieczny, manager of investment fund Fondul Proprietatea (FP.RO), which holds minority stock in the two companies.

Romanian state-owned power producers Hidroelectrica and Nuclearelectrica could draw funds worth a total EUR3.5 billion when floating stock on the bourse, Monday said Greg Konieczny, manager of investment fund Fondul Proprietatea (FP.RO), which holds minority stock in the two companies.

Hydropower generator Hidroelectrica should draw EUR2.2 billion when listing, while nuclear power plant operator Nuclearelectrica could obtain EUR1.3 billion, without the state having to lose majority, Konieczny told the conference MEDIAFAX Talks about the Restructuring of Loss-Making Companies.

One option would be an initial public offer for 36% of Hidroelectrica and 43% of Nuclearelectrica. The Proprietatea fund would have its stakes reduced to 13% in Hidroelectrica and 6% in Nuclearelectrica, while the state would keep 51% in both companies, Konieczny said.

The state currently holds 80% in the hydropower producer and 90% in the nuclear power plant operator. The remaining shares in both companies are owned by Proprietatea.

The Proprietatea fund is managed by US firm Franklin Templeton, which has tried for months to convince the government to the list the two companies' in Bucharest, while keeping the majority stakes.

Hidroelectrica is the cheapest power producer in Romania and a subject of debate regarding several bilateral contracts concluded in the past, at prices benefiting the buyer.

The Franklin Templeton official said the bilateral contracts caused Hidroelectrica to lose 800 million lei (EUR1=RON4.1152) from its 2009 profit.

Referring to the privatization of OMV Petrom (SNP.RO), Romania's largest oil company and another topic of intense local debate, Konieczny said the company may, indeed, have been privatized at a very low price, but this has allowed it to become profitable.

The Franklin Templeton official added companies need corporate governance, bourse listing and investment, without the government losing majority.

Previously, the ministry announced late-2010 that 15% stakes in gas producer Romgaz, power grid operator Transelectrica (TEL.RO) and gas transporter Transgaz (TGN.RO) would be listed by the end of this year.