Franklin Templeton recommends Warsaw Stock Exchange listing for Fondul Proprietatea

Franklin Templeton, the manager and administrator of Fondul Proprietatea, announced it was recomedding the second listing of the fund to take place on the Warsaw Stock Exchange WSE, in the first quarter of 2012. The announcement follows a six-month study and talks with eight major global investment banks.

The arguments supporting the recommendation include that fact that the fund will benefit from increased visibility among institutional investors, including those specialized in long-term perspective investment funds. At the same time, this second listing will facilitate the access of more investors currently not investing in Romania to the fund, which is also expected to be included in more analysis reports of international brokers.

The second listing is supposed to be combined with an offer of up to 10 percent of the existing shares of the fund. Warsaw was chosen from a short list which included also London and Vienna.

According to Franklin Templeton, WSE has become an important node for large companies in the region, and had a record number of international companies listing here in 2010. The total value of IPOs on WSE last year totaled USD 99 billion. The volume and amount of IPOs is expected to increase in 2011 as well.

With a market capitalization of USD 2.5 billion, Fondul Proprietatea will be among the first 15 companies as far as size is concerned from the 417 currently listed on WSE. This would ensure the fund better visibility than a listing on the London Stock Exchange, where there are over 2,000 companies with a similar or greater market value.

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Fondul Proprietatea is not eligible to be included in the FTSE indexes unless it re-registers in the UK, which entails more challenges for the fund. According to Franklin Templeton, while London listing would target an institutional investors’ base similar to those in Warsaw, the demand for the fund’s shares would be lower in London. At the same time, costs for transitioning admission and yearly fees are lower in Warsaw than they are in London: in between RON 9,500 – 74,000 at WSE and RON 16,500 – 188,000 at LSE.

Franklin Templeton explained that since the fund is focused on investing in Romanian shares, its relevance would be greater for investors interested in the region.

Fondul Proprietatea was established to compensate Romanian citizens whose properties have been abusively taken over by the communist regime.