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Romania's Fondul Proprietatea reviewing strategic options for Hidroelectrica stake

Hidroelectrica

BUCHAREST (Romania), September 8 (SeeNews) - Romanian investment fund Fondul Proprietatea [BSE:FP], a shareholder in majority state-owned Hidroelectrica, said on Friday that it is reviewing strategic options regarding its stake in the hydro power producer.

The decision is part of the investment fund's ongoing commitment to increase value for shareholders and improve the liquidity of the assets in its portfolio, Fondul Proprietatea said in a statement filed with the Bucharest Stock Exchange, BVB.

Fondul Proprietatea owns 19.94% of the issued share capital of Hidroelectrica, representing 32.01% of the fund’s net asset value as at end-June 2017.

"Our review is in its early stages and there is no defined timetable for any decision. Further announcements will be made as and when relevant," the fund added. "However, it is to be noted that Citigroup Global Markets Limited (“Citi”) and UBS Limited have been appointed financial advisers in connection with the envisaged transaction."

The Romanian government owns 80.06% of Hidroelectrica through the energy ministry. Investment fund Fondul Proprietatea [BSE:FP] owns the remainder.

Hidroelectrica's gross profit jumped by an annual 26% to 744 million lei in the first five months of 2017, while turnover rose 11% on the year to 1.436 billion lei. In 2016, Hidroelectrica's gross profit rose 36% year-on-year, reaching 1.5 billion lei.

At the beginning of April, Hidroelectrica exited insolvency, which paved the way for a long-awaited listing on the BVB seen as the biggest in Romania's history.

The initial public offering (IPO) of a 15% stake in Hidroelectrica is expected to raise 1 billion euro ($1.06 million), the court-appointed administrator of the company has said.

The government's plans to dual-list a 15% stake in Hidroelectrica on the BVB and the London Stock Exchange have been repeatedly delayed as insolvency proceedings were taking longer than expected, despite the company's strong financial recovery.

Hidroelectrica operates more than 207 hydro power plants with a combined installed capacity of over 6,432 MW.

Blue-chip Fondul Proprietatea was set up in 2005 to compensate pre-Communist property owners for their assets nationalised after 1945.

In mid-August, Fondul Proprietatea said it has started procedures for a potential disposal of its ownership interest in Enel Romania and Engie Romania. The fund has been trying to sell these assets since 2012 in an effort to limit the number of unlisted companies in its portfolio.

In July, Romanian power distributor and supplier Electrica [BSE:EL] signed a 752 million lei memorandum of understanding for the buyout of minority stakes in four of its subsidiaries from Fondul Proprietatea.

In 2016, the fund sold its stakes in oil and gas group OMV Petrom [BSE:SNP], in the Romanian units of German utility E.ON - Distributie and Energie and in natural gas producer Romgaz [BSE:SNG].

Shares of Fondul Proprietatea traded 1.05% lower at 0.8460 lei on the BVB at 0946 CET on Friday.

(1 euro=4.5980 lei)

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