English
Reporter: Have you begun contacting potential investors for the Proprietatea Fund?
Dana Mirela Ionescu: Yes, of course, we are in constant contact with numerous institutional foreign investors, both ourselves, as well as our colleagues of ING and BRD-SocGen. These investors are the clients of the banks in the consortium, including ours. For the road-show we are considering about 120 foreign funds, which have assets of over 700 billion Euros under management. We are getting close to drafting the definitive schedule of the meetings between the managers of those funds and the manager of the Proprietatea Fund.
Foreign investors are extremely interested in the shares of the Proprietatea Fund, given the fact that many funds could not access the Romanian market so far, due to its low liquidity.
Reporter: Mr. Mark Mobius once mentioned the possibility of attracting investors from Asia and the United States to the Romanian market. Why will the roadshow for the listing of the Proprietatea Fund only cover Europe?
Dana Mirela Ionescu: From an administrative and legal point of view, we can"t look for investors in jurisdictions outside Europe because the prospectus is written according to the European legislation. If one wants to go to the United States, one needs to draft a prospectus that complies with their regulations. But that wouldn"t be an issue. In general, Asian or US funds also have entities incorporated in Europe, precisely so they can invest in European offers. Therefore, we will also meet with American and Asian investors.
Reporter: Brokers and the BSE are enthusiastic because of the effect that they expect the listing of the fund will have on the market. Is this enthusiasm justified?
Dana Mirela Ionescu: I think it definitely is. If the volumes of the shares of the Fund that the press said were traded via the Central Depository will persist after the listing, that would mean the BSE"s trading volumes would double. Especially since the the trading volumes of the Fund"s shares are expected to rise after the listing, compared to what they were until now.
Reporter: Some of the most active buyers of shares of the Proprietatea Fund are brokers. Now they are asking themselves if they"re going to find who to sell to after the listing of the Fund ....
Dana Mirela Ionescu: What I can say is that there is major interest abroad in the Proprietatea Fund. It"s like this: there are funds that have the mandate to invest in all the countries of the European Union, which have specific exposure quotas based for each country and region. For them it was difficult to meet their exposure quotas precisely because the market is so illiquid. The Proprietatea Fund could be the opportunity they were looking for. Moreover, there is interest from the funds outside the European Union.
Reporter: The CNVM issued a decision that the shares of the Proprietatea Fund would be traded via nominee accounts, without prevalidation. Will brokerages be ready to trade using nominee accounts by January 25th, when the Fund will get listed?
Dana Mirela Ionescu: "Erste" shares are already being traded that way, so brokers are ready.
Reporter: Why didn"t the market institutions decide from the beginning that the shares of the Proprietatea Fund would be traded just like the shares of "Erste" and allowed a certain level of confusion among brokers?
Furthermore, isn"t the trading of Erste shares via nominee accounts simply part of a pilot-program?
Dana Mirela Ionescu: Indeed, "Erste" is part of a pilot program. The Proprietatea Fund will be traded based on the new code of the Central Depository, provided it gets approved in due time by the NBR and the Romanian National Securities Commission. Failing that, it will be traded based on the current code From our point of view, the Regulation number 5 includes a series of rules that brokers will need to comply with in the future, after the NBR and the Romanian National Securities Commission will have approved the new Code of the Central Depository. This week there were meetings with the brokers at the Depository where the requirements of the new code were explained to them. So, regardless of which code will be used, we will all be ready by January 25th.
Reporter: How will you know if the listing of the Fund was a success or not?
Dana Mirela Ionescu: From my point of view, it is already a success. The very fact that the Fund is getting listed, after so many years, is a success. The fact that we met the very narrow deadline imposed by the law is another success. The listing will be a great help to the shareholders which received shares as compensation, as well as to the Romanian capital market.
Reporter: Didn"t "Franklin Templeton" set certain terms for the intermediary that would show whether the listing was a success?
Dana Mirela Ionescu: This listing is not an IPO. From this point of view, it is not a typical listing, but it will be successful anyway, for several reasons. We"ve been waiting for this listing, since 2005 when the Fund was created, it will help the shareholders of the Fund trade their shares openly, to find buyers quicker, pricing will be more transparent and trading will be simpler. So for those who were compensated with shares in the Fund, this will clearly be a great help. For the market itself, we expect the listing to help double the BSE"s current volumes.
Reporter: Even if the price falls below par value? Won"t this cause major discontent among shareholders that waited all this time?
Dana Mirela Ionescu: Shares of the Proprietatea Fund have traded below par value so far. I don"t see how that would be a problem. When shareholders wanted to sell, they needed to go to the Depository, look for a buyer, accept the price they were offered in a non-transparent manner, and awkwardly do everything by themselves. But after the listing it will be a lot easier, brokers will do everything in their place, and the pricing will be transparent, the same for everyone at a certain moment. Right now I couldn"t tell if the price after the listing will go above 1 leu or below, but no matter what, things would be better than they are now.
Reporter: You"ve drafted the prospectus for the listing of the Fund. What is the value of the Proprietatea Fund?
Dana Mirela Ionescu: We haven"t made an evaluation yet, because these things can"t be done in the prospectus. I can only tell you that the analysts of our research department put out a report this summer, because we have investors that have already invested in the Fund, and the target price was 1.05 lei/share. As far as I know, they are now working on a new report.
Reporter: Is the target price set by the new research report higher or lower?
Dana Mirela Ionescu: I can"t comment on this matter.
Reporter: Has the final value of the Fund"s share capital been decided?
Dana Mirela Ionescu: Yes. The Fund"s share capital was reduced, causing the stake of the state to be reduced, according to the amounts that were paid-in. Furthermore, the claims of the state were removed, to prevent having the Fund be required to go to the Trade Registry constantly, most of the time in order to pay off insignificant amounts.
Reporter: Does the Fund have other significant shareholders, apart from the Ministry of Finance?
Dana Mirela Ionescu: The members of the Malaxa family jointly own 7.35% of the share capital, but they have only 2.87% voting rights.
Reporter: Will RCI be a market maker for the shares of the Proprietatea Fund?
Dana Mirela Ionescu: We intend to be a market maker for the stock as well as for the derivatives of the Proprietatea Fund. We will begin as market makers for the stock on January 25th, and for the derivatives the date has yet to be established.
The Board of Directors of the BSE can decide the list of issuers for which there will be a market maker. The Proprietatea Fund will request to be included on this list.
Dana Mirela Ionescu: An act of God, I can"t think of anything else. All the things that depend on us, are well set up and have been completed since September.
Reporter: What is the first destination of the road-show?
Dana Mirela Ionescu: Romania. We will have meetings with Romanian retail and institutional investors. Since the Fund is a Romanian issuer, it is only natural that we would meet with Romanian investors.
Reporter: Will RCI handle the listing of the Proprietatea Fund in London as well?
Dana Mirela Ionescu: it hasn"t been discussed. Once it starts trading, we"ll see. The Fund is reviewing this option. There are several aspects concerning the listing of the Fund in London. One of them is the connectivity between the Depositories. It does not exist for now and it is something that is being worked on.
Reporter: Why are foreign investors so interested in the Proprietatea Fund?
Dana Mirela Ionescu: You have to realize that even though the Bucharest Stock Exchange had major issuers listed, their free-float was very small. The Proprietatea Fund has a free-float of almost 60%.
Investors now see a big issuer that they can buy, and one that has a diversified portfolio, which includes stakes in some very attractive companies, which aren"t listed, that you can"t get access to in any other way. It is kind of like the Crown Jewel. It"s only natural that they would be interested ... For an entity that is looking to invest in Romania, the Proprietatea Fund is a good place to start.
Reporter: How do you explain to foreign investors the "donation" that "Romgaz" is being forced to make to the state budget?
Dana Mirela Ionescu: We tell them that the Fund intends to do everything in its power to oppose this donation, and have it replaced with the payment of a special dividend. Some of the foreign investors are aware of this situation and they weren"t happy with it. But the discussion isn"t yet over. It is still being debated and the Fund hopes to get results on this matter.
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