25 percent of Croatian Electric Company (HEP) will be offered through the initial public offering.
Croatian Electric Company (HEP) is currently undergoing the process of selection of new management. Once it is selected, preparations for HEP’s initial public offering (IPO) will start, which means that company’s shares would be offered to citizens, institutional investors and perhaps workers, according to sources from the government, reports Večernji List on 5 August 2017.
For this idea, HDZ has the support of its coalition partner HNS. The money raised from the IPO would not be used for the acquisition of shares of INA, which was the government’s plan late last year. The reason is that the government has changed its mind and does not plan to buy MOL’s stake in INA anymore. The idea is now to use part of the money for investments. The shares will be offered to citizens, large investors and employees, with current and former employees receiving shares under more favourable conditions.
A government source says that the goal is to have more efficient public companies, and that can supposedly be achieved by introducing new private shareholders. Also, it is often said that capital for new projects should not be found solely by taking out loans from banks.
According to the government, collecting money through the capital markets is much more efficient because the markets would be revived, and pension funds would also be able to invest. They have long mentioned HEP as a positive example of where to invest money. Their assets are significant, but the problem is they have nowhere to invest them.
The IPO process is slow; even if the new management is soon appointed by the government and preparations for the IPO start in the autumn, the IPO itself will not take place until the next year.
One of the advantages is that HEP is already well-known to the investment circles because it has issued bonds and hence prepared a prospectus for investors. When IPO was first mentioned at the beginning of the year, it was said that the Law on Waters would need to be amended so that HEP could receive the building rights without compensation on plots where hydropower plants are located. For now, the owner of hydropower plants is the state, and not the company.
Until this is not resolved, it is difficult to talk about the company’s value. Earlier estimates said that the company was worth around 20 billion kunas, so the state could get about five billion kunas for 25 percent of shares.
The main prerequisite for the IPO will be political willingness which apparently exists with both coalition partners, at least for now. The state launched major IPO drives about ten years ago with INA and Croatian Telecom (HT) shares when many citizens earned money on them, so the same is expected now from HEP.
Translated from Večernji List.
