Romania moves to scrap key hurdle to Hidroelectrica IPO

Romania is removing a key legislative hurdle to launching a long-awaited initial public offering (IPO) of a minority stake in state power producer Hidroelectrica possibly by the end of this year, the centrist government said on Wednesday.

Romania is removing a key legislative hurdle to launching a long-awaited initial public offering (IPO) of a minority stake in state power producer Hidroelectrica possibly by the end of this year, the centrist government said on Wednesday. The government is overturning the provisions of a bill approved by the then leftist-dominated parliament last August which prohibited the sale of minority stakes in state-owned firms for the next two years, a move criticised by investors.

"Listing minority stakes means a chance to modernise, make investments, which, obviously, will benefit every Romanian," Energy Minister Virgil Popescu said. The government move still requires parliamentary approval, but this is widely seen as a formality as the centrist coalition now has a majority following a general election in December.

The Bucharest Stock Exchange ranks among the smallest in the region, with a capitalisation of more than 160 billion lei ($39.49 billion). It needs liquidity, as do private pension funds, some of the country's biggest institutional investors. Prior to the pandemic and the IPO bill, Hidroelectrica, Romania's largest power producer, had hoped to list a minority stake in 2020.

FTSE Russell upgraded the bourse to "secondary emerging market" from "frontier" status in September. ($1 = 4.0512 lei)