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Templeton-Led Fund Eyes Dual Listing for $10 Billion Utility

Templeton-Led Fund Eyes Dual Listing for $10 Billion Utility

Franklin Templeton-managed Fondul Proprietatea SA seeks to list a stake of at least 15% in Romania’s Hidroelectrica SA in Bucharest and on another European market by the end of the year, in what could be the largest share offering in the country’s history. 

After years of waiting for the government to decide on listing Hidroelectrica, Fondul, which has a 20% stake in the hydro-power generator valued at 42.65 billion lei ($9.8 billion), decided to go on its own and proceed with the sale, manager Johan Meyer said in an interview Thursday. The closed-end fund hopes to get the formal agreement of the government as the majority shareholder of Hidroelectrica by the end of this quarter. 

The Hidroelectrica stake sale is likely to help the Bucharest Stock Exchange win a long-awaited upgrade to emerging-market status by MSCI and also help the government meet one of its pledges to the European Union under the recovery fund. 

Listing Hidroelectrica, due to its size and potential, “would be massive in the context of the Bucharest Stock Exchange,” Meyer said. “In order to have a successful transaction we would need to spread the net as wide as possible and make it accessible to as many investors as possible, and that includes having the potential of a dual listing.” 

Meyer said London would be a “natural venue for a dual listing,” but that the decision had yet to be made. 

Hidroelectrica is the largest position in Fondul Proprietatea’s portfolio. The fund sold a 4% stake in OMV Petrom this week in order support a buyback program and pay dividends. 

“The market’s been benefiting from record or near record high prices and that factored into the decision” to sell Petrom, Meyer said, adding that further sales of its remaining 3% stake in Romania’s largest oil and gas company will be evaluated based on the market context. 

Fondul will also seek to list a minority stake in Salrom SA, a state-owned Romanian salt producer, after it capitalizes on having professional management and improved governance, according to Meyer. 

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