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September 29, 2022

Sovereign Development and Investment Fund’s portfolio to count for 27 lucrative companies

The Sovereign Development and Investment Fund (FSDI)’s portfolio will account for 27 lucrative companies, and the listing of Hidroelectrica will be decided by the new entity, on Wednesday announced the representatives of the Public Finance Ministry (MFP), in a meeting with the media.

“The share capital of the FSDI will be made of in kind contribution represented by the stocks held by the state in the FSDI companies’ portfolio, as well as of cash contributions. The stock packages are transferred to the FSDI property, and the latter will freely use them, as own goods. In the case of the companies which at the time of the takeover are property of the state integrally or in majority, the FSDI could not alienate these stocks under any circumstances, if this act would lead to losing position of majority shareholder of FSDI of the said companies,” says the statement of reasons of the draft released on Wednesday on the MFP website.

According to MFP, the FSDI’s cash share capital will be worth RON 1.85 billion, the money coming from the Treasury, from privatisations. The fund will have 27 profitable companies, but CEC Bank and EximBank were ruled out on the reason that “it would have been awkward to get indebted for a project with the banks in its portfolio.”

Hidroelectrica will be among the 27 companies, and the MFP officials say that a future IPO will be covered by the FSDI. Moreover, should the fund considers to sell shares of some companies in its portfolio, it will have the possibility, but it has to preserve at least 50+1 percent of the shares. The fund’s representatives will be part of the AGAs (Shareholders General Assembly). The fund could also buy private companies’ shares on the stock market, too, but its role is to invest in the economy.

“The draft bill will have an impact upon the state budget’s revenues starting with 2018, in the sense of the slashing of the revenues to the state budget with the value of the dividends cashed by the FSDI in exchange of the shares transferred to the FSDI portfolio. This influence will be recovered in the years following the first year of operation by cashing the dividends the FSDI will pay to the state, as a single shareholder, according to the AGA decision to distribute the profit and set the dividends,” the Statement of Reasons says.

Thus, the impact in the state budget is RON 2 billion per year, because the dividends will be cashed by the FSDI. The fund will never get listed, and its goal is to make profit.

The accounting value of the companies in its portfolio at the level of 2015, is worth RON 45 billion.

The project is due to touch down the Parliament this September.

The companies the FSDI will be shareholder are: Engie Romania, Electrica, Delgaz, E.ON Energie Romania, Biofarm, Chimcomplex, OMV Petrom, Telekom Romania, Antibiotice, Compania Natională pentru Controlul Cazanelor, Instalatiilor de Ridicat si Recipientelor sub Presiune (National Company for Boilers, Lifting Installations and Pressure Receptacles’ Control), Loteria Romana, Societatea Nationala a Sarii (National Salt Company), IAR, OIL Terminal, Cupru Min, Unifarm, Societatea Nationala a Apelor Minerale (National Company of Mineral Waters), Compania Nationala de Investitii pentru Turism (National Company for Investments in Tourism), Romgaz, Societatea de Producere a Energiei Electrice în Hidrocentrale – Hidroelectrica (Company of Electricity Production in Hydropower Plants – Hidroelectrica), Aeroporturi Bucuresti (Bucharest Airports), Nuclearelectrica, Imprimeria Nationala (National Printing House), Compania Nationala Administratia Porturilor Maritime (Maritime Ports’ Administration National Company), Societatea de Administrare a Participatiilor în Energie (Power Participation Management Company), Conpet.

“The purpose of the FSDI is to develop and finance from own funds and from drawn funds, the projects of profitable and sustainable investments, in various economic sectors, through a direct or intermediate participation of other investment funds or investment societies, alone or together with other institutional or private investors, as well as to manage its own financial assets, with a view to getting profit,” the MFP representatives say.

FSDI will have the structure of a financial intermediation company with the Romanian state as single shareholder the long of its functioning. The Founding Act, the strategy and activity of FSDI will go by the budget deficit and public debt’s rules in order to maintain the FSDI ranking outside the public sector, during its entire existence.

“FSDI will be dually managed, by a Supervisory Council and a Directorate. The first members of the Supervisory Council will be appointed through Government Decision for 18-month period, with the job to hire the Directorate and organise the FSDI activity. The FSDI administration at both non-executive (Supervisory Council) and executive levels (Directorate) will be covered of an independent manner, in accordance with its investment policy, with a view to get profit in the market conditions, by grabbing assets and passives in own name with assuming the risks associated to such commercial activities, within the boundaries of the investment strategy endorsed by the shareholder. The members of the Supervisory Council are nominated by the Shareholders General Assembly based on a transparent selection own procedure, that is to be adopted by the shareholder,” the MFP informs in a release sent to AGERPRES.

According to its statute, the FSDI will observe the best governance practices and will be financed from the revenues got from dividends cashed from the companies in its portfolio, the ones resulted from operations with own financial instruments and the ones issued by other entities, from incomes got from selling portfolio’s stock packages, from loans, by bonds’ issuance, included, and other sources provided by law.

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