Fondul fund may sell Hidroelectrica stake as IPO drags

BUCHAREST (Reuters) - Romanian investment fund Fondul Proprietatea FP.BX is considering selling its 20 percent stake in state-owned hydro power producer Hidroelectrica, a move it said was triggered by lack of government progress in listing it.

The initial public offering was originally planned for 2014 under the terms of the European Union state’s aid deal led by the International Monetary Fund at the time. The firm came out of insolvency in 2016 after years of restructuring.

Fondul said it has appointed Citigroup Global Markets and UBS Limited as financial advisers for a potential transaction.

“We decided to evaluate strategic options for our stake in Hidroelectrica given the lack of progress on the proposed listing, despite conducive market conditions and significant investor interest,” , Fondul Proprietatea Co-CEO and Portfolio Manager Johan Meyer said on Friday.

The $2 billion Fondul, which is managed by global investment manager Franklin Templeton, was set up to compensate Romanians whose assets were seized under communism.

More than 70 percent of its portfolio is made up of unlisted, mainly state-owned companies. Its stake in unlisted Hidroelectrica accounts for a third of its net asset value at 742 million euros ($895 million).

Fondul has been trying to narrow the discount between its share price and its net asset value by buying back its stock, financed by divesting small stakes in listed utilities like oil and gas group Petrom ROSNP.BX or gas producer Romgaz ROSNG.BX.

“As part of its ongoing commitment to increase value for shareholders and improve the liquidity of the assets in the Fund’s portfolio, the Fund is reviewing strategic options regarding its ownership interest in ... Hidroelectrica,” it said in a statement on Thursday.

“Our review is in its early stages and there is no defined timetable for any decision.”

Energy Minister Toma Petcu said in an emailed response to Reuters: “It is premature to comment on the option advanced by Fondul Proprietatea regarding its stake in Hidroelectrica ... We expect to see a clear offer from the minority shareholder of Hidroelectrica in order to be able to formulate an answer.”

Analysts and investors have said a large-sized IPO such as Hidroelectrica's, after the 870 million lei ($226 million)listing of cable and internet provider DIGI Communications DIGI.BX this year, would help get Romania's stock exchange short-listed for an upgrade to emerging status from frontier.

Reporting by Radu Marinas and Luiza Ilie; Editing by Elaine Hardcastle