Energy IPOs add lustre to Romania bourse, reform needed

Romania's initial public offerings of state-controlled energy majors Romgaz and Nuclearelectrica will boost liquidity on the country's stock exchange that is in dire need of reform to lure investors, its chief executive said. The Bucharest Stock Exchange is one of the least developed emerging European markets - with just over 80 listed firms and a capitalisation of roughly 27 billion euros - only a fraction of Poland's, the region's biggest.
Foreign investment on the bourse has long been stifled by scarcity of offerings and tight regulations that are "almost prohibitive," Ludwik Sobolewski told Reuters in an interview. "We need investors, better corporate governance, a better trading mechanism, better risk management ... one or two privately-owned companies to send a message that the exchange is not only for privatisation's and so on," he said.
"It will not happen at the same time, but we have to work on everything in parallel." The government listed gas producer Romgaz with shares in Bucharest and Global Depository Receipts (GDRs) in London on Tuesday. Its shares surged some 20 percent on their debut. Sobolewski said the goal was to be seen by the investor community as a bourse with emerging market status, a step up from what analysts refer to as a frontier market.
The 48-year-old executive was appointed earlier this year after a six-year stint at the Warsaw Stock Exchange, which he helped turn into the biggest market in central Europe. The capitalisation of Warsaw-listed companies totals some 800 billion zlotys ($254.5 billion) and the exchange is in talks with the region's second-biggest bourse, in Vienna, about a possible merger or co-operation agreement.
The Vienna Stock Exchange's parent is the CEE Stock Exchange Group, which also controls the Hungarian, Czech and Slovenian bourses. Sobolewski dismissed the idea of consolidation. "Those markets ... well, I wouldn't like to share the situation in which they are now. The Vienna bourse as well is in a clear regression, so it's not a surprise for me that they are looking for new possibilities, for new consolidation." In contrast Bucharest had room to expand from a small base, he said, particularly given the number of potential privatisation's still possible in the country.