Property Fund wants second listing in Warsaw, manager ponders hydropower

The Property Fund is looking for a second listing on the Warsaw Stock Exchange, but the regulatory body the CNVM (Romanian National Securities Commission) fears that this would see liquidity transferred from the local market, according to Grzegorz Konieczny, portfolio manager at Franklin Templeton Investment.

The fund manager says that the local market will have sufficient liquidity and expects the listing on the Warsaw Stock Exchange to take place in the first half of 2012.

The Property Fund was listed on the Bucharest Stock Exchange in January of this year, after Franklin Templeton Investment took over as management and investor administrator 14 months ago. The net asset value of the fund is EUR 3.5 billion, with 86 percent being shared by companies in the energy sector, such as Hidroelectrica, OMV Petrom, Romgaz and Nuclearelectrica.

“The potential for hydropower in Romania is huge but we need a regulatory regime. Right now, Hidroelectrica and Nuclearelectrica are charging low prices. So we hope that working with
the government will lead to fair prices being set. A two-tier system for industry and consumers could be put in place. Fuel prices are going up, the waste in electricity is extensive, and people become more conscious if prices are higher,” said Mark Mobius, executive president of Templeton Emerging Markets Group.

Mobius added that Romania had made a daring decision when it agree for a private company to manage a portfolio of state-owned firms, but that rapid reform is needed for these companies. He referred to regulatory reform, the correct pricing of electricity and a deregulated framework for setting up a new enterprise.

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The fund is encouraging the Romanian government to set up IPOs or SPOs for companies such as Hidroelectrica, Nuclearelectrica and Romgaz.

Last week, during an event on energy, Konieczny forecasted that Romania could obtain up to EUR 3.5 billion by selling minority stakes in Hidroelectrica and Nuclearelectrica.
Konieczny said that the government decision to assign private managers to state enterprises will facilitate the listing of these companies on the stock exchange.

The first five companies that will have private management, which include Hidroelectrica and Oltchim, are in the portfolio of the Romanian Ministry of Economy. Pedersen & Partners has been selected as the consultant that will draw up the management requirements to recruitment companies.  

The Property Fund was established in 2005 to compensate Romanians whose properties were confiscated by the former communist government. Franklin Templeton took over as investment manager and sole administrator in September 2010.

The number of companies in the Property Fund has been reduced through sales from 83 at end-September 2010 to 76, out of which 29 are listed, at end-October 2011.

The Ministry of Public Finance holds a 3 percent stake in the fund, while a combined 50 percent share is owned by Romanian and foreign institutional investors. The remaining 47 percent stake is split among residential and non-residential individuals.

Ovidiu Posirca