BCR Obligatiuni assets over 3.2 billion after June merger

The mutual fund BCR Obligatiuni has reached RON 3.2 billion (EUR 700 mln) in assets and almost 95,000 investors after the merger with BCR Monetar that was finalized in late June, and is now looking to get a rating and make it more appealing for institutional investors.

The merger decision was taken after the EU changed the regulation on mutual funds that brought a series of investment restrictions after June 30 in order to ease the risk of investors, according to Dragos Neacsu, CEO at Erste Asset Mangement (EAM).

“When we analyzed the investor structure, their behavior, the investment period and the placement duration, as well as the investment structure, we concluded that there is an 80 percent similarity between BCR Monetar and BCR Obligatiuni so we decided to unite them,” said Neacsu.

“The merger is a reference point for the development of our market and is one of the largest in the region,” he added.

BCR Monetar was the largest mutual fund in Romania, with assets of RON 1.66 billion (EUR 362 million) and over 62,000 investors. Another seven funds are active on the domestic market with combined assets of RON 2.5 billion (EUR 546 million).

BCR Obligatiuni has 92,000 retail investors and 3,000 corporate customers that include NGOs, foundations, high schools, universities and football teams. The largest retail investment stands at RON 8 million (EUR 1.7 million), while in corporates it ranges between RON 1 and RON 10 million (EUR 2.1 million). The fund yielded at 7 percent in the last 12 months.

Neacsu said BCR Obligatiuni will be become eligible to receive a rating later this year as it has been active on the market for five years. This should increase the trust of the fund for corporate and institutional customers, especially pensions funds. It may be rated by Morningstar or Lipper.

More than half of the portfolio of BCR Obligatiuni comprises of state bonds, while bank deposits take a quarter. Corporate bonds represent almost 20 percent, but the fund also has municipal and supranational bonds.

EAM launched earlier this month Erste Monetar, a mutual fund that meets the new European standards. It has an initial capital of RON 7 million from BCR Obligatiuni.

“I expect Erste Monetar to have right from the start placements from the corporate sector, to have 30 percent institutional and corporate investors in the next two years,” said Neacsu.

EAM is the largest player on the Romanian market of mutual fund with a market share of 36.2 percent, according to the Association of Fund Administrators (AAF). Raiffeisen and ING hold 33.8 percent and 12.7 percent of the market. In addition, EAM holds a 20.62 percent market share in the investment fund industry, making it the leading firm on the opened and closed-end funds.

Ovidiu Posirca

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