Property Fund plans to sell stakes this year

The Property Fund (FP) is looking to sell participations in power and gas utilities, which represent about 20 percent of its net asset value, EUR 3.3 billion at end-December 2011.

The fund celebrated last week one year from its listing on the Bucharest Stock Exchange (BSE), the largest listing in Central and Eastern Europe, according to Stere Farmache, board member in the BSE administration council.

FP is now selling shares at a 60 percent discount although 63 percent of the companies in its portfolio are unlisted. An FP share was traded at RON 0.63 last year while last week it averaged at RON 0.47 per share.

“The key objective of the fund is to attract additional shareholders and this can be done at the current stage only through a secondary listing,” said Grzegorz Konieczny, portfolio manager at Franklin Templeton Investment and fund manager at FP.

Konieczny mentioned last November plans for a second listing on the Warsaw Stock Exchange which should take place this year. In fact, the fund manager believes the BSE should follow the Polish model and list all state-owned enterprises (SOEs), a move that would attract local and foreign investors.  

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The wave of IPOs and SPOs of SOEs scheduled for this year should have greater chances of success than the Petrom SPO, which failed last year due to insufficient take-up for a 9.8 percent stake in the company.

“The Petrom SPO was a case study from our perspective on how not to make a public offering at an international level. Looking at the recent developments, the government has learned its lesson and one proof of this was the selection of an investment bank for Romgaz, Goldman Sachs, one of the largest banks in the world,” Konieczny told BR.

SOEs that are part of the fund’s portfolio need to initiate listing procedures by end-December 2011, under a law approved this month.

Although the government is planning public offerings in energy companies such as Hidroelectrica and Romgaz, the listing may not bring significant gains.

“There is no guarantee that the listing of a company immediately raises its price. With the new tools, rules and regulations, we believe a combination of listing and new public rules will improve the performance of these companies by improving total operations and raising capital for investment,” said Mark Mobius, executive president of Templeton Emerging Markets Group.

Mobius believes the situation in Europe will stabilize by year-end and the Euro will come out of this crisis stronger. The executive says Romania will be in good economic shape, allowing the successful listing of SOEs.  

The protests that erupted two weeks ago in Romania have worried Moody’s rating agency, which issued a report saying that creditworthiness may be at risk if reforms are halted.

“I don’t think Romanian policy makers should take into account the opinions of rating agencies. I think they should make independent decisions,” Mobius told BR.   

Ovidiu Posirca