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Closer Look: Dentons' Loredana Chitu on Hidroelectrica RON 9.3 Billion IPO

Closer Look: Dentons on Hidroelectrica RON 9.3 Billion IPO

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As reported by CEE Legal Matters on July 11, 2023, Dentons advised Hidroelectrica on the issuance and listing on the Bucharest Stock Exchange. CEELM reached out to Dentons Partner and Head of the Capital Markets group in Bucharest Loredana Chitu to learn more about the matter. 

CEELM: At what stage was Dentons involved in the IPO and what was the firm’s role in it?

Loredana: In April 2020, we won the tender for the issuer's counsel role on this IPO, but the deal was afterward delayed for two years because of a change in the law that restricted any form of privatization in Romania. The transaction was back on track in 2022 with a new structure in which only Fondul Proprietatea was selling its stake in Hidroelectrica, in a deal ran by the issuer, which would become listed on the Bucharest Stock Exchange. We offered assistance to the issuer in all phases of the IPO, from selection of the banks, pre-marketing, prospectus drafting and publication, to pricing and admission to trading, as well as post-listing reporting obligations.

CEELM: What do you believe it was about your team that won you the mandate?

Loredana: We put together a strong cross-border Dentons team of capital markets-dedicated local and international partners with important experience in transactions of this type, as well as team members with expertise in the sector in which Hidroelectrica is active, namely energy production, trading, and supply. The tender book was demanding in terms of experience and documentation required and we worked hard for one month in producing a winning pitch in a very competitive process. We wanted Dentons to have a pivotal role in this jumbo IPO and we are proud we could help Hidroelectrica in reaching this milestone.

CEELM: What specific aspects did you advise on and who took the lead on what parts of that work internally?

Loredana: The assistance to Hidroelectrica was run by me from Bucharest, collaborating on US securities and English law matters with a team led in London by Partners Cameron Half and Nik Colbridge. Our team in Bucharest, as mentioned, was led by me with the help of a large number of lawyers, especially capital markets Associate Alin Roca, Partner Claudiu Munteanu-Jipescu, and Counsels Elena Vlasceanu (on energy aspects) and Andreea Predescu (environmental and water management aspects), took the lead on prospectus drafting, review, and negotiation of subscription and sale terms, due diligence, review of disclosure in other offer related documentation (such as analysts’ and investors’ presentations), corporate governance and approvals, relationship with the FSA, stock exchange and central depositary. Our colleagues in London took the lead on the review and negotiation of banks’ engagement letter and underwriting agreement, confidentiality agreements, cornerstone agreements, and publicity-related restrictions, while helping in all the other workstreams.

CEELM: What was the most challenging aspect of the IPO from your perspective?

Loredana: People have been waiting for this IPO for almost 10 years now, so there was pressure building up to execute it in 2023, despite sometimes volatile markets across the EU. A deal of this size, with so many parties and so many pieces of the puzzle to put together, is never easy to get past the finish line, especially in a timeline that did not have room for slippage because of a fixed deadline. Luckily the two equity advisors on the deal (STJ for Hidroelectrica and Rothschild for Fondul Proprietatea), along with the four Joint Global Coordinators (Citi, Erste, Jefferies and Morgan Stanley), guided the parties through the management of this large process. There were also matters specific to state-owned companies that we had to navigate, but in doing so we benefited from the experience gained by our Dentons team members in IPOs with similar issuers.

CEELM: In contrast, what did you find went particularly smoothly?

Loredana: The authorities were prompt and aligned with our timetable. We collaborated very well with the lawyers involved in the transaction on the selling shareholder’ and banks’ side, as well as with the representatives of the majority shareholder, the Romanian state. We were also pleasantly surprised to see the high level of oversubscription on the retail tranche, as well as that a EUR 1.9 billion IPO was successfully priced with a Bucharest-only listing. This shows that CEE capital markets are stronger and ready for more and, why not, even larger, deals.

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