A jumbo hydropower listing may define how investors assess extreme weather risks.
. And while rivals relying on fossil fuels suffered higher costs, Hidroelectrica’s share of the domestic electricity market expanded from 2% in 2021 to 8% last year.
CEO Bogdan Nicolae Badea is hoping to list nearly 20% of Hidroelectrica. At the top of the range it would raise up to 2 billion euros and be Europe’s largest IPO so far this year. That would value the whole company at over 8 times last year’s adjusted EBITDA, Breakingviews calculated. That’s a multiple similar to that of 12 billion euro Verbund, which also generates over 90% of the electricity it sells from hydro assets.
Yet there are some red flags. The Romanian state, which currently trails most European peers in Transparency International’sA more unpredictable and potentially severe problem is climate change. Hidroelectrica’s focus on harnessing flowing water power is a double-edged sword. In 2022, intense droughts hit countries from China to France. Romania wasn’t immune, and it is also prone to floods, which pose a threat to its dams, according to the.
The company is trying to diversify into wind and solar power. That would take time and be expensive. Investors willing to bet on Hidroelectrica may need to brace for volatile weather.
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