No major news, investors are positioning for the potential Hidroelectrica IPO

Summary: There was no significant surprise in these reports as we received the September NAVPS report in the beginning of October. NAVPS arrived to 1.5751 RON/share in the end of October (-1% m-o-m), with relatively size of cash in the fund.
 PLEASE NOTE THAT tender offer subscription period ends 16th December. Fondul will buy back ca. 165 million shares (2.6% of the outstanding shares excluding treasuries) at the price of RON 1.39 per share ca 5% premium to current share price.
 Price discount to NAVPS reached ALL TIME LOW (-16% - please see our graph below) as second tender offer approaches and investors are positioning themselves to the potential Hidroelectrica IPO next year (H2). Despite the fact that there is a law against selling shares of the gov. in SOE’s (State Owned Enterprises), investors seem to expect the cancellation of that law, once the newly elected government takes over after the general election (6th December). Which is rational, as the Liberals won in the local election held on 27th September. We made an some calculation of the NAVPS of Fondul assuming that the valuation of Hidroelectrica would be similar to its closest peer (Verbund) – please see our table below.
 Fondul announced the continuation of its usual buyback program for the next year with a similar size compared to this years (800 million share).