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14 I Companies & Markets bne June 2021
“We are doing our best in order to prove that the Bucharest Stock Exchange is the best place to be for Hidroelectrica,
in order to increase the transparency, the image of the government if it decides to do this step," says Hanga. "We
rely on the fact that given the very good performance of the already listed state-owned companies we are going to see steps made by the state in this direction. If this is going to happen, it will help us in order to obtain the emerging market status also from MSCI. But we are not relying only on Hidroelectrica. We have two IPOs on the main market in the pipeline and we see the picture already improving in this area.”
Meanwhile, there has been a positive evolution in the AeRO market over the last two to three years. AeRO was launched in 2015, taking over from the former Rasdaq platform that hosted smaller, mainly former state-owned companies following
the mass privatisations of the 1990s. Recently, however, it has been the go-to source of financing for smaller Romanian companies; the requirements for AeRO are less stringent than for the BVB main market.
“We see the ecosystem improving. The smaller companies are looking with greater interest towards capital market financing and of course that translated into a lot of new listings, especially on the AeRO market. We see this tend accelerating, in terms
of liquidity and the market capitalisation of the AeRO market, which is reaching new highs,” Hanga tells bne IntelliNews.
“In 2019-21, more and more private entrepreneurial local companies have been using the platform as a way of financing. Companies are raising capital in the form of debt, through bond issues, and companies are raising equity using the AeRO market. The numbers are quite spectacular: in the first four months of this year alone, there have been nine bond issues on AeRO and seven companies listing. A few weeks ago there was a period when we had almost daily events with companies coming to the market. We see this trend continuing going forward.
“The information we have from the brokerage community is that there is a strong pipeline of companies at different stages of accessing the market, not only for AeRO; we also have a smaller companies addressing the main market through IPOs.”
While the BVB is open to companies from all sectors, it has been actively working with certain sectors that are better represented in the Romanian economy and have strong growth potential, specifically technology and agriculture. The exchange is getting closer to the two sectors to raise its visibility as a financing opportunity.
IT, says Hanga, has been a strong driver of the economy in the last few years, and to tap into its potential the BVB signed a memorandum of understanding with the highly successful local equity crowdfunding investment platform Seedblink in March. The two will work together to ease access to financial capital for companies, for example by supporting promising tech start-ups from SeedBlink’s portfolio to assess the opportunity to go public.
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The first company to list on AeRO back in 2015 was from the IT sector. Six years later, Bittnet Systems announced it was entering the FTSE Global Micro Cap and FTSE Total-Cap indices. More recent companies to tap the market were online furniture and home decor retailer Vivre Deco and cyber- security company Safetech.
Agroland, operator of the largest network of agricultural stores in Romania, was listed on the AeRO market on March 1. The company’s shares soared over four times in the first trading day when its market capitalisation reached RON244mn. The very latest listing was by dairy company Laptaria cu Caimac, which went public on May 21.
The next goal
Asked what the BVB’s new goal is after achieving its long- held ambition to be elevated to emerging market status – the driving force behind multiple reforms in the last few years – Hanga says there is still a lot to do to grow the importance of the BVB as a financing route for the local market.
“Our target is to increase the presence and the importance of the Bucharest Stock Exchange as a financing source for the Romanian economy. This is a story that is not going to end. One of the strategic pillars for the Bucharest Stock Exchange is to increase the market capitalisation of the exchange towards 20% of Romania's GDP."
The fourth edition of the BVB’s Made in Romania – aimed at the development and promotion of the Romanian entrepreneurial environment – launched in April, for the first time using a new platform developed in partnership with Microsoft Romania. The aim of the scheme is to increase the visibility of the local entrepreneurial system, and bring together entrepreneurs, investors, brokerage houses and advisers.
Around 600 comparnies have taken part in Made in Romania, out of which some have issued bonds and others have ended up listing. The financing rounds that companies in the programme have carried out in recent years through the
BVB have a total value of around €80mn.
Once the pandemic recedes, the BVB plans to step up its efforts among retail investors. In addition, the bourse recently launched an initiative to improve research for companies that again will help to raise the visibility of listed companies.
The BVB’s management are also looking at diversifying revenues streams and its product portfolio, for example by becoming more active in the data vending area. Probably the most important development is the central counterparty. This is being built by the Bucharest Stock Exchange in partnership with OPCOM, the Operator of the Romanian Electricity and Gas Markets. This co-operation will bring into the market derivatives not only on stocks and indices, but also on energy products.