Market conditions and risk aversion are not so gloomy as in previous
years and favorable pricing and demand for a possible initial public offering
(IPO) of Croatian state-owned energy utility HEP could be easily secured, a
financial analyst from Raiffeisenbank Austria said.
Earlier this month,
HEP hired Morgan Stanley, Sberbank and the local unit of Italian lender
UniCredit as advisers on its IPO plans.
Croatia's economy ministry has
told SeeNews that the government will consider an option for an IPO of up to 25%
of HEP, subject to market conditions.
“The plans to start the
privatization of HEP seem reasonable as the company is stable and could be sold
at a good price,” Nada Harambasic-Nereau said in an emailed response to a
SeeNews inquiry.
The analyst cautioned, however, that plans to arrange an
IPO in an election year most certainly raise eyebrows.
“Selling a
minority stake in this case has more advantages as the market could absorb it
more easily,” Harambasic-Nereau said.
A move to list a larger stake in
HEP, on the other hand, could possibly run into constraints as there may be
insufficient liquidity on the Zagreb Stock Exchange.
In addition to HEP,
the Croatian government also plans an IPO for HAC-ONC, the maintenance and
tolling unit of state-owned highway operator Hrvatske Autoceste (HAC), after
calling off in March a tender to award a concession on over 1,000 km of
motorways.
The plans to raise around 1.3 billion euro ($1.42 billion) in
the HAC-ONC IPO from pension funds and the general public seem too ambitious,
even more so if an IPO for HEP also takes place, the analyst said.
“The
pension funds could show an interest in the HAC-ONC IPO as they were already
engaged in monetization plans for the motorways. However, they would need to
reshuffle the structure and exit some bond positions in order to create
significant capitalization. As for the general public, despite large deposits
held in bank accounts, the crisis has left a painful scar in people’s memories
and their risk aversion towards equities could be higher than that of
institutional investors,” Harambasic-Nereau said.
The analyst does not
expect dual listing of HEP or HAC-ONC to result in higher liquidity as the
examples of Hrvatski Telekom and INA, both with dual listings on the Zagreb and
London bourses, did not yield any results in that respect.
HEP group owns
and operates over 4,000 MW of installed generation capacity and 974 MW of heat
production capacity, including 25 hydroelectric plants and eight thermal power
plants fired by oil, natural gas or coal.