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May 6, 2021

Five years since the listing of Fondul Proprietatea on the Bucharest Stock Exchange

Romania did not draw at all funds through privatizations last year, although 2015 was a record year for the EMEA [Europe, Middle East and Africa] region in terms of privatization through initial public offerings, which totaled 13 billion euros, Fondul Proprietatea Manager Greg Konieczny (photo) told a press conference on Tuesday marking five years since the listing of the Fund on the Bucharest Stock Exchange.

Fondul Proprietatea’s Konieczny: Romania does not draw funds through privatizations in 2015

“Romania did not draw at all funds through privatizations in 2015. We hope that the Government will take advantage of this window of opportunity this year,” said Greg Konieczny.

According to him, Fondul Proprietatea “has backed continuously the development of the local capital market” but “there are still many things to do and the only way to ensure progress is the listing of new companies on the stock exchange. We work constantly to improve the efficiency and profitability of the companies in our portfolio, but now it is the Government’s turn to make the next move to show its commitment to list them. Companies such as Hidroelectrica Airports Bucharest, Constanta Port, the Romanian Post and Salrom are viable candidates and we hope to see them listed in 2016 and 2017,” added Greg Konieczny.

He pointed out that in the five years since its listing, Fondul Proprietatea has had a major positive impact on the companies in its portfolio by militating for the implementation of corporate governance standards, which has positioned Romania “on the radar of major global investors, and has generated added value for its investors.”

U.S. Ambassador: More state-owned companies should be run by professional managers an listed on the capital market

More state-owned companies should be run by professional managers and listed on the stock exchange, so that the depth and maturity of Romanian capital market can evolve faster, like the experience of other developing markets showed, U.S. Ambassador to Bucharest Hans Klemm stated on Tuesday.

A profound and liquid capital market would also provide a solid basis for growth, the US Ambassador explained, adding that, as the experience of other developing markets showed, the depth and maturity of the Romanian capital market would evolve faster if more state-owned companies were run by professional managers and were listed on the stock market. The Proprietatea Fund and Franklin Templeton could play a crucial role in the transition towards a significant and steady growth for Romania, the US Ambassador to Bucharest stated at a press conference on the occasion of the anniversary of five years since the listing of Proprietatea Fund on the Bucharest Stock Exchange (BVB).

According to the US official, the effects of the listing of the Proprietatea Fund on the stock market and of its being managed by Franklin Templeton have a spill over effect on the capital market in Romania and on the entire Romanian economy.

Under the management of Franklin Templeton, the Proprietatea Fund attracted an increased interest from international investors, promoting thus Romania and the Romanian capital market, Klemm explained. Franklin Templeton lobbied several governments, promoting initial public offers. Moreover, the Fund used BVB for the placement of shares at the companies in its portfolio with a total value of 445 million euros (484 million dollars), increasing considerably the stock exchange’s liquidity, the US Ambassador added.

Klemm also pointed out that the secondary listing of the Property Fund on the London Stock Exchange raised Romania’s visibility and that of the companies in the portfolio of the Fund.

The listing of the Property Fund had positive effects on the Romanian economy as a whole, the US Ambassador added. By attracting international portfolio investments of 1.2 billion euros, the Property Fund brought the Romanian economy the much-needed liquidity, Klemm explained.

According to the ambassador, the uninterrupted promotion by the Property Fund, in its position of minority shareholder, and together with Frank Templeton, of solid corporate governance in state companies, helped raise the profitability of these companies.

The numbers speak for themselves: the net profit of the main 20 companies in the Fund’s portfolio went up by 80pct between 2010-2014, to the benefit of companies, of their shareholders and of Romanian economy, the US Ambassador explained. After looking at the past of the Proprietatea Fund, let’s ask ourselves how the future of Romania will look like, the diplomat suggested. I see potential for Romania to be a strong and rich country, he added. However, to achieve the sustained economic growth necessary to reach this objective, a strategic vision is needed as well as a profound administrative reform to set up a body of professional public servants, apolitical, competent and honest and a healthy, stable and transparent decision-making process, together with long-term planning and investments, Klemm stated.

According to the American diplomat, the Fund’s listing on the BVB and the secondary listing at the London Stock Exchange highlighted Romania’s potential as a destination for investors.

Before listing, the shares of the Fund were overvalued, trading on the grey market at a price 90pct lower than their nominal value, Klemm explained. As a result, the beneficiaries of restitutions would only receive around 10 bani for every leu of the value of Fund shares, the ambassador pointed out, adding that thus, as institutional investors did not have the opportunity to invest in the Fund, the appetite to invest in the Romanian capital market of Romanian and foreign investors, currently in development, would decrease. Currently, the Fund’s shares are trading at 70 bani per share, an amount seven times higher than before listing, Hans Klemm concluded.

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