Shareholders in the Property Fund (FP) agreed last week in principle on a secondary listing of the fund on the Warsaw Stock Exchange, which should be carried out by the end of this year.
The heir of industrialist Nicolae Malaxa, Georgia Palade van Dusen, the largest individual shareholder with a 6.5 percent stake in FP, and the City of London, which holds 7.2 percent of shares, called this February for a general shareholders meeting in order to vote on the FP’s secondary listing in Warsaw, which should increase demand for FP shares.
Greg Konieczny, FP fund manager, said the secondary listing would attract new investors and increase demand for shares. He added that this move will not drain liquidity from the Bucharest Stock Exchange (BSE). The manager said that companies that have chosen Warsaw for a secondary listing saw liquidity on the domestic market increase by 7.8 percent.
Franklin Templeton, sole manager of the Property Fund, will set up a listing plan and select the investment plan this May. The proposal should be voted on by shareholders by the end of June and the secondary listing completed later this year.
Last July the FP manager recommended the listing of a maximum 10 percent of shares in Warsaw in the first quarter of this year.
“I said we want to do the secondary listing combined with an offer of existing shares. Either we will be allowed to acquire them from the market, or some shareholders will decide to sell them,” said Konieczny. “Or maybe initially we will make a technical listing, followed by an offering to bring in liquidity.”
At present, the fund manager is in talks with the Romanian National Securities Commission (CNVM) over the legal aspects of the secondary listing, which are taking longer than initially expected. The CNVM wants to issue regulations to allow the listing to proceed, although this is already technically possible, according to Konieczny. Linking the central depositaries in Romania and Poland is another condition for the listing.
FP shares are currently trading at a 50 percent discount due to the unlisted companies in the fund’s portfolio, which make up 57 percent of the net asset value (NAV) of EUR 3.69 billion at end-February.
FP’s administration contract was amended last week by shareholders, following a proposal from US hedge fund Elliott Associates, which holds a 13.9 percent stake in the fund.
The hedge fund believes the share discount could be reduced by selling assets and distributing the resulting funds to shareholders. Franklin Templeton would receive 1.5 percent of distributions made through to 2013, and 1 percent thereafter. It cashed in around EUR 6.5 million for FP management last year.