Hidroelectrica’s listing, if it happens, will probably be the most important capital market event of the year. Daniel Naftali, Deputy Portfolio Manager of Fondul Proprietatea, kindly gave us an interview and answered a few questions on this topic.

Journalist: When do you think Hidroelectrica’s listing will take place?

Daniel Naftali: The listing of Hidroelectrica is a key objective for Fondul Proprietatea. Since March last year, we have received the approval of the shareholders of Hidroelectrica to list the company through the offer made by Fondul Proprietatea, and since November 2022, we have also received the approval of the shareholders of Fondul Proprietatea for this transaction. Therefore, we want to see the company on the Bucharest Stock Exchange as soon as possible. It is clear that the listing on the stock exchange is a complex process, both for Fondul Proprietatea, as the selling shareholder, and for Hidroelectrica and for the management of this company, which actually prepares the company for the listing. At the same time, I must emphasize the fact that in any listing there are aspects that are strictly outside the will of the parties, an important element is the market conditions that will exist at the time of the actual launch of the offer.

Journalist: In PNRR we have 15%, FP will theoretically transfer 20% of the company, right?

Daniel Naftali: Fondul Proprietatea owns 19.94% of Hidroelectrica’s share capital. We have full flexibility to offer up to a maximum of 19.94%. As a Fund manager, we have a duty to our shareholders to achieve an optimal transaction, and the actual, final size of the offering will depend on investor appetite, market conditions at the time, the price the market will accept, etc.

Journalist: And what is the situation now?

Daniel Naftali: Fondul Proprietatea, the company’s management and the project team are working very intensively on this transaction in all the work processes typical of any IPO. In parallel, the process of selection to the Supervisory Board is ongoing. The 4-year mandate of the Supervisory Board, appointed in 2019, ended at the beginning of February 2023. The shareholders, the Ministry of Energy and Fondul Proprietatea, approved at the general meeting of Hidroelectrica shareholders last October the start of a new selection process for the creation of a new supervisory board. This selection process is ongoing. The key role in the final formation of Hidroelectrica’s management structure will thus belong to the Ministry of Energy.

Journalist: What impact will Hidroelectrica’s listing have on the Romanian energy market?

Daniel Naftali: First of all, I want to emphasize that the field of energy is quite well represented on the capital market in Romania. The companies that are listed and already have quite a long history are Electrica, a group that is more focused on the supply and distribution of electricity, and Nuclearelectrica, the second largest electricity producer in Romania.

Hidroelectrica has a very special portfolio that consists almost entirely of hydroelectric plants, and if we take renewable energy sources into account, it is a 100% green portfolio. Hidroelectrica’s listing will complement and strengthen the profile of the electricity market listed on the Romanian Stock Exchange.

For the energy market, Hidroelectrica’s listing on the Bucharest Stock Exchange will help increase transparency and governance in a sector dominated by companies with larger state capital.

Journalist: Will the listing also have an impact on the Bucharest Stock Exchange?

Daniel Naftali: Obviously. I said that placing Hidroelectrica on BVB was the intended goal and objective of Fondul Proprietatea for many years. I believe that the listing of Hidroelectrica is also the goal of the Bucharest Stock Exchange and the Romanian capital market in general.

In particular, the listing of Hidroelectrica on the BVB will represent a decisive step towards the Romanian capital market achieving emerging market status. According to the analysis and classification of FTSE, the capital market in Romania is classified as an emerging market, but all investors are waiting for the possible promotion of Romania to the category of emerging markets, also according to MSCI. Apart from the classification, the most important thing is that by listing Hidroelectrica, it is possible to attract as many investors as possible to the local market. They will then have the opportunity to look for other investment opportunities in the local market, either in companies that are already listed on the stock exchange or in unlisted companies that wish to be listed.

Journalist: Can Hidroelectrica’s clients suffer in any way after the listing?

Daniel Naftali: For Hidroelectrica customers, the listing is an additional confirmation that they have a long-term business partner with clearly defined strategies and standards in their energy supplier.

Journalist: What benefit will the listing bring to the state company?

Daniel Naftali: The listing on the stock exchange will consolidate the company’s profile as one of the most important companies in the field of electricity, not only at the national, but also at the European level. At the same time, we believe that listing on the stock exchange will accelerate the company’s long-term development. Any registered organization benefits from additional access to medium and long-term funding. Also, if we talk about the development of Hidroelectrica, it is generally accepted that a company with high standards of management, transparency and sustainability has a much higher chance of long-term development and growth.

The article is supported by Fondul Proprietatea