Recommendation - prepare for the Ignitis Group IPO

Press release of the Ministry of Finance, the authority implementing the rights of shareholder.

Today, the Working Group which was set up by the Ministry of Finance to assess Ignitis Group long-term financing alternatives, provided a recommendation to prepare for the Company’s initial public offering (IPO).

The Working group provides its recommendation confirming that the Company will need 5-6 billion EUR during the period of 2020–2030 in order to achieve the goals ensuring the reliability of the strategic energy generation resources and distribution network as well as development of the production of renewable energy capabilities in Lithuania and abroad.

Working together with the experts from the financial, legal and other fields with extensive international experience, the Working Group has assessed that the IPO is the most effective capital raising alternative for the Company. It is also expected to create the significant economic and reputational benefits for both the State and the population.

“The recommended financing alternative - IPO - would bring undeniable benefits to Lithuania. During the period 2020-2024, it would potentially could contribute EUR 2.4 billion to Lithuania’s GDP and bring EUR 700 million to the state budget. It is important to emphasize that this would strengthen the country's energy independence and that the IPO process itself could serve as a major breakthrough for the local capital market by enabling all Lithuanian citizens and pension funds to acquire shares of the Company, attracting large institutional investors. Also, one of the potential benefits is the risk management of the rising electricity prices for Lithuanian consumers during the intensive investment period of the Company,” said Finance Minister Vilius Šapoka, chairman of the Working Group.

The Ministry of Finance supports the Working group recommendation and will initiate actions authorizing the Company to prepare for the IPO. The decision will need to be discussed at the Government level.

"The projects in Lithuania that would be implemented after raising funds through IPO are necessary to ensure efficient energy production, development of renewable energy sources, and reliable operation of the entire energy sector as well as national energy security and independence as a whole," says Energy Vice Minister Egidijus Purlys.

“We consider the recommendations of the Working Group and the approval of the Ministry of Finance as a demonstration of confidence in the implementation of the Company's ambitious strategic plans both in Lithuania and abroad. Recommended IPO would enable us not only to invest in strategically important energy generation, distribution network efficiency, and renewable energy projects, but also to maintain a stable dividend payment policy. I have no doubt that the IPO would have a significant positive impact on the energy sector and the country's economy as a whole. It would also further enhance the transparency of the Company's operations, corporate governance methods and practices. Therefore, we are keen to prepare well for this process,” says Darius Maikštėnas, Chairman and CEO of the Ignitis Group.

The Working Group recommends that free-float of the Company’s IPO should be between 25% and 33.33%, listing location should include at least national market and a local retail tranche.

The Working Group which was formed in December 2019, was assigned to assess the Company's long-term financing alternatives and their impact to the shareholder expectations, implementation of the National Energy Independence Strategy, the Company's long-term financial sustainability and implementation of the strategy 2030 as well as the impact on Lithuania’s economic, social, national security and capital markets development. As a result, a recommendation to the Ministry of Finance should have been submitted on the Company's long-term financing alternatives, including raising equity in both national and international capital markets.

The working group consisted of its Chairman Finance Minister Vilius Šapoka, Deputy Chairman Deputy Finance Minister Darius Sadeckas, Vice Minister of Energy Egidijus Purlys, Vice Minister of Economy and Innovation Jekaterina Rojaka, Advisor to the Prime Minister Lukas Savickas, Director of the Monitoring and Forecasting Agency Vidas Danielius, Darius Daubaras, Chairman of the Supervisory Board of Ignitis Group, and Darius Maikštėnas, Chairman and Chief Executive Officer of Ignitis Group. International experts and market participants from various fields also attended the meetings.