Shareholders in the Property Fund (FP) approved in principle the extension of Franklin Templeton’s mandate as administrator for another two years starting September 2014, reports Mediafax newswire.
The proposal was made by Elliott Associates, the US-based hedge fund that holds a 14.95 percent stake in the fund. The fund had proposed the extention of the mandate by two or four years, designing certain performance criteria for Franklin Templeton. American banking giant Morgan Stanley holds a 5.14 percent stake in the fund.
“We want to make a reevaluation of them before September 2014, and I hope they will meet these performance criteria and we will be satisfied, the share price will increase(…) We are expecting performance from them and we do not want to provide a four year mandate without conditions,” said Iain Gunn of Elliott Associates.
Greg Konieczny (in picture), fund manager at FP, commented the new administration contract will have to be negotiated by Franklin Templeton and FP’s board of nominees. The new deal will have to be vetted next year by the fund’s shareholders.
Elliott Associates proposed the introduction of an additional commission that can be cashed in by Franklin Templeton from the funds distributed to shareholders, through share buybacks, the reduction of the share capital and the disbursements of sums towards shareholders.
The board of nominees favors an extension of Franklin Templeton’s tenure as sole administrator of FP.
Franklin Templeton stated its intention to continue at FP, claiming it has the “experience and skills gained in the past three years in promoting the interests of the funds’ shareholders.”
The hedge fund wants the discount between FP’s traded shares and the net asset value per share to stay below 15 percent for a maximum of two thirds in trading sessions between October 2014 and June 2015.
FP shares traded in mid-November at a discount of 30.9 percent, while the daily average turnover in the year to date stood at around EUR 3.7 million.
Franklin Templeton gave up the secondary listing on the Warsaw Stock Exchange, due to lack of regulation in linking the Polish and Romanian Central Depositaries. Representatives at Franklin Templeton said in the past this would have been on of the growth avenues for FP’s shares.
The EUR 3.4 billion closed-end fund currently holds stakes in 66 companies, out of which 24 are listed on the Bucharest Stock Exchange. The fund said in September it was planning to sell a part of its holding in Conpet, not exceeding 10 percent of its stake in the company.
FP’s budget for next year includes a slight decrease in revenues to RON 632 million (EUR 142 million) and three percent drop in the net profit to RON 556 million (EUR 125 million).
The FP is currently controlled by foreign institutional, which held a 59 stake in the FP by October, while Romanian individuals have 22 percent of the shares. Foreign individuals and Romanian institutional controls stakes of 6 percent and 9 percent, respectively. The Ministry of Finance controls 4 percent.
The fund’s administrator boasted its Analyst and Investor Days were attended last week by international institutional investors with EUR 300 billion in assets under management.