Since 2011, Fondul Proprietatea (the Fund) has “acted as a gate into the country for foreign capital, having attracted since its listing over EUR 1.4 billion in direct portfolio investments from foreign institutional investors”, said Mark Mobius, executive chairman of Templeton Emerging Markets Group, part of Franklin Templeton Investment Management Limited UK, sole director and fund manager of Fondul Proprietatea, at a press conference on Tuesday.
Fondul Proprietatea celebrated its five year anniversary since its listing on the Bucharest Stock Exchange (BVB) on 25 January 2011, a period marked by several highlights, such as the fact that “the discount has narrowed from an average of roughly 55.7 percent in 2011 to a year-to-date level of 35 percent and a record low of 20 percent in April 2015, before the Fund’s listing on the London Stock Exchange”, reports a press release from Franklin Templeton Investments. Moreover, during this time, shareholders received a total of RON 6.29 billion (EUR 1.42 billion) through dividends, returns of capital and share buybacks, added Franklin Templeton.
At the moment, the Fondul Proprietatea stock trades at 70 bani per share, “seven times greater than before the listing” and “Fondul has distributed over RON 2 billion to restitution recipients, about 20 times more than they received from 2006 to 2009”, according to U.S. ambassador Hans Klemm, present at the Fund’s anniversary. “With the Bucharest Stock Exchange listing, institutional investors, who had been sitting on the sidelines, could seize the opportunity to purchase Fondul shares and invest in Romania,” he added.
Having in its portfolio a total of 21 state-owned enterprises, the Fund has seen the total EBITDA for the 21 companies increase by 71 percent in 2014 compared to 2011, to RON 7.13 billion, while the net profit has gone up 80 percent in the same period. One company in their portfolio, Hidroelectrica, went from RON 500 million losses in 2012 to “a record profit of RON 941 million in 2014”, according to the press release, and a net profit of RON 1.1 billion in 2015.
Regarding the future of the Fund, “the only way further progress can be achieved is through the listing of new companies on the stock exchange”, commented Greg Konieczny, Fund Manager of Fondul Proprietatea, pointing also the lobby conducted by the Fund for the development of the capital market. Moreover, “2015 was a record year for the EMEA region in terms of the privatization IPO volume, which stood at EUR 13 billion (five IPOs), up significantly from EUR 2 billion (four IPOs) in 2014,” he added, pointing out that Romania has not attracted any funds through privatizations in 2015 and that it is up to the government to “take advantage of this window of opportunity this year”.