Greg Konieczny, fund manager of the EUR 3.3 billion Property Fund, says that removing the current discount of 33 percent on the fund’s shares remains a key priority. He adds that the fund has attracted over EUR 1.2 billion in direct investments from international portfolio investors in the three years since it was listed on the Bucharest Stock Exchange.
[restrict] Are shareholders satisfied with your performance as administrator of the Property Fund?
You should ask the shareholders! But the share price is also an indication of this, and it is close to an all time high, so we have delivered something.
How do you plan to further reduce the discount on the FP shares this year?
We will continue what we have been doing so far. The buybacks, the distributions to shareholders, and also (e.n. other measures) like increasing the value of our companies and the Net Asset Value (NAV). This can be partially done through different actions we take with companies and there are also IPOs and sales to strategic investors to make the portfolio more liquid and lower the share of unlisted companies in the portfolio.
Were the sales of stakes in OMV Petrom and Transgaz one-off events or part of a wider strategy?
In order to do the buybacks and the distributions to shareholders, you also have to generate cash, so the proceeds from that kind of transaction are available for the buyback of shares and for distribution. In the future, we may do similar transactions or may do something different, but right now we are increasing the scope and actions that we can take with more and more companies being listed.
How much investment has the fund attracted?
It is EUR 1.2 billion in terms of new foreign institutional investors. They invested this in order to increase their share in the FP. The investors come from the US, the UK, Western Europe, Eastern Europe, and some from the Middle East.
Is the Romgaz IPO enough to turn the country into an emerging market?
There are some requirements in terms of the size of the companies and the free-float, and it is not enough. The free-float from companies such as Romgaz and OMV Petrom should increase, but one or two bigger (e.n. companies), and also larger free-floats are needed to qualify for the upgrade.
Should the government pursue dual listings for the upcoming IPOs in Hidroelectrica, Electrica and Oltenia Energy Complex?
Yes. The aim of each offering should be to maximize demand; we know it through our shareholders and we do meet other foreign investors. A lot of them have no accounts or trading activity in Romania, and have no intention of doing it at least for some time, so why keep them away from investing in Romanian equities? As long as they can become shareholders even through GDRs (e.n. global depositary receipts) in London, they are still shareholders in these companies. So then it is easier to bring them into Romania rather than just start from scratch and abandon them completely.
Do you think the appointment of private managers to state-owned companies has failed?
No, I think that we’re seeing, also at some of our companies (e.n. in the FP portfolio), really positive changes thanks to this law. We did support it, and it is definitely not a failure. It is a positive development and, okay, there are some improvements to be made.
Why do you think professional boards are changed all the time at these companies?
That was the rule before: every time there was a change in the ministries and the secretary of state, the boards would also change. Now this process is much more difficult although you still see it, especially in the Ministry of Transport companies, which are not in our portfolio. The boards and management teams at the companies in our portfolio are now much more stable.
What is your outlook on the economy this year?
We would not be surprised if the economy exceeded 3 percent growth based on export growth and production growth in the economy. The new drivers should be domestic consumption; the economic situation has really improved a lot. People are making more money so they should start spending, plus there are EU funds and other investments in infrastructure.
Ovidiu Posirca [/restrict]
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