Exclusive interview of Tiziano Giovannetti for Bloomberg

17/05/2017-Exclusive interview of Tiziano Giovannetti, Executive Director of the company Fintel Energia Spa and MK Fintel Wind for Bloomberg

B: So, I think I’ll let you first outline the plan and then we can follow up with a few questions.

T: Well, sure. As we anticipated, we’re working on the first IPO in the Serbian market, in the Serbian and Belgrade Stock Exchange specifically and that would be the first IPO concerning renewable energy in the country, so we expect a great interest from the general public and from institutional investors. We are working on this plan since a couple of months, but we saw in the last few weeks a significant accelaration ’cause there is a lot of liquidity out there and there are a lot of institutional investors which are seeking for returns which are in a way connected not just to the papers but with real assets and the kind of investment that we were performing in the country specifically in Serbia but also in another countries with our italian holding is to be considered the infrastructural investments, so long-term investments from out of which a lot of communities benefit for decades and the reason why we’ve decided to place our IPO in the country it’s because the investments remain in the country and will remain on a long-term and so we think it’s good and it’s an oportunity for lot of communities to co-invest in development of their country. So, that’s generally the plan.

B: And when do you plan to initiate IPO?

T: There is a procedure which is country sensitive, lets say every country has itsown regulations to go public and we are following the Serbian legislation on that. First of all we checked if we are eligible or not eligible for such a kind of operation and fortunately yes we are, we also saw a very nice and strong commitment from the Belgrade Stock Exchange ’cause they wouldn’t really like to attract some new companies to debut in the market and consequently we are working according to the procedure to prepare all the papers and the necessary assessments and to take all the necessary steps which are needed to go on IPO. Our time frame is quite short but I would like to conclude this procedure by the end of the year because this period concedes with the construction of our largest wind farm in the country „Košava“ which is currently under construction and it would last for an additional 20 – 22 months, so it’s good to have in paralel  the debue on the market but on the other side to prove that the use of procedure directly employed to build something which will remain in the territory for the generations to come.

B: And you plan to raise how much?

T: Well, according to the first evaluations which we got, the market capitalization of the company may range between 120 and 150 million eur which is putting the company, they told me, in the top 10 top 15 capitalizations of the Belgrade Stock Market, as much as I learned, the market capitalization of the Serbian Stock Market in not big, it’s in the range of 2.8 billion EUR and so we could place our company nicely let’s say in the middle of the classic value. Concerning the amount of investment that we carry on and the investment that we perform over the last two years, we have already invested 25 million eur and now we are investing 125 million eur, so indeed the market capitalization is a fraction of the total investments that our pipeline would require on the mid-term. Energy investments and infrastructure investments are extremely expensive and they absorb a lot of CAPEX, so in order to do so, you typically go on leverage with finacial institutions or with banks and the sponsors of the company usually bring in only let say the initial capital so, the equity contribution part which is required. We want to spread our shareholder’s  structure, we want to have more investors and we want to be more transparent because that’s the only way to attract new investments. I had a tour few weeks ago in the Gulf and many sovereign investment funds which belog to countries like Saudi, Qatar, Abu Dhabi are very interested to look at green energy oportunity, the long wave of green energy ... is just starting in this country, we are a pioneer in the wind business and now we think that we are going trasparent and being IPO or being public..will, you know, will attract additional investors and we’ll contribute to give us additional strenght to be faster in the implementation of our ambitious pipeline. So we believe it’s a nice step. It’s very unconventional as much as I heard because, it’s not typical for the Serbian economy to have companies listed and publicly owned, but we do believe that my setted trend for other companies to follow and this is also value we bring into the country.

B: Again, how much your equity out of presumed 100% of ownership are you willing to offer to investors?

T: Up to 40% we’ll be placed on the market..up to..not necessary 40% but we might be satisfied also if, given than this is the new thing for the country and this is the new experience for the local investors, if we raise something which go betweet 15-20 % of the initial target will be still fine. So, let’s say, the minimum is going to be floated 20% maximum 40% and of course we don’t wanna float the majority because we don’t wanna lose the control over the company. Typically, green companies go on a second round after two or three years after the first IPO and usually IPO is just a debut is so-called the introduction to the market and the introduction usually go between 10 and 15 % of the total flow so, let’s see I mean, we gave the limit to 40 % because we also understand that there is a lot of liquidity and a lot of investors came to us and they all wanted to buy in the beginning not after in order to have a significant price advantage..we’ll see, but we are confident that at least a minimum will be reached.

B: My next question is about the minimum threshold to consider IPO successful..Usually there is a threshold I don’t know if you have the one in mind, so what would be the minimum that you will consider the whole operation successful?

T: The thresholds are usually fixed by the Serbian legislation and country laws that regulate IPO process itself and also by let say the company which is issuing new shares to the advantage of the new saviours, new investors, as I said before, 15 – 20% will be satisfactory to us and we’ll justify the additional bar in our structure that we have to allocate, that we have to prepare and organize being listed impies some costs, implies transparency as I said before, impies procedures and all of this requires additional costs, so the trade of doing it or not doing it depends on the quantity of money that you are capable to attract, but we do believe that 15% 20% of float will be enough. 

B: After 40%..and in terms of millions of euros or dollars..what is the target?

T: As we said, the total capitalization, it’s not somehing that you can predict very specifically but let’s say that we are in the range of 120-150 million eur..this is the post money evaluation that we expect on the basis of some assessment that we have received, so 20% of this will be 15-20 million eur 30 million eur, up to 40% which will be 40 – 50 million eur. That is the range where we are navigate at the moment.

B: So there’s no minimum to make operation valid?

T: There’s no minimum because, in the worst scenario you do introduction, you don’t run away, you stay in the country, you perform your investments and you might come back for the second round next one year two years, in order to show the public that you have performing according to the business plan what you have presented at the beginning, so, again, there is no rush, no emergency, it’s a matter of strategy and our strategy looks at the long-term. So, if you plan to be a long term operator, it goes together with having at the local investors to support your program.

B: Excellent..evaluation of the whole company will depend on the how much you have raised for certain percentage?

T: Well, that’s partially true..I mean you usually go with pre-money evaluation and then depending on the flow, on the floating section that you’ve put on the market, the overall capitalization comes up, but again we are basing our estimates on the pre-money evaluation. That’s quite firm at the moment. Technically speaking, the evaluation of a green energy company IPP (independent power porducers) like us it’s pretty much simple because at the end of the story we are the sum of a list of project, each project has a certain ABTA has a cetain CAPEX, has a certain leverage and of course has a certain return over the initial investment. So, it’s pretty much predictable. And that’s why we are capable to attract so far, a lot of institutional investors, like pension funds or investment funds, because we look at the returns on a long term and when you have an asset, the long-term in a solid legal frame like we have right now in the country, is pretty much predictable.

B: Have you picked any consultants or advisers?

T: We are selecting. Now, we have shortlisted the consultants, which will come with us to this new venture and I have to say that we are pretty well advancing.