EnglishFormer owners whose assets were abusively seized by the Communist regime, who decided to sell their shares in the Proprietatea Fund on the stock market, have taken a loss of approximately 35% compared to the compensation value (ed. note: the face value of the stock was 1 leu). Shares of the fund traded yesterday in range between 0.6020 and 0.6750 lei/unit and closed at 0.6495 lei/unit. The stock"s price however, is higher than the last prices at which the shares were selling on the "gray" market, (from 0.48 to 0.52 lei/share).
The turnover of the shares of the Proprietatea Fund amounted to 213.6 million lei, or 87% of the market"s turnover.
Gregorz Konieczny, the manager of Franklin Templeton and portfolio manager of the Proprietatea Fund, thinks that the liquidity of the Fund"s shares is more important than their price on the first day. "Price will be volatile, it"s in the nature of the market. For us, liquidity is more important", said Mr. Konieczny.
According to Adriana Tănăsoiu, the head of the Central Depository, over 2 billion shares were transferred into the accounts of brokers, prior to the listing.
Gregorz Konieczny also said that the main challenge for the coming period is to actively manage the Fund"s portfolio and to bring as many of the companies that the Fund has interests in to the Stock Exchange.
The manager of the Proprietatea Fund, "Franklin Templeton" has announced that on the day of the listing, the issuer would launch the buyback of up to 9.98% of its shares, at prices ranging from 0.2 lei/share and 1.5 lei/share.
Mark Mobius, the Executive Chairman of Franklin Templeton Emerging Markets, said that the Proprietatea Fund would start buying back shares only when the price will begin to fall. "We will buy to support the price. The price is now 0.6 lei and is going up. If we start buying back stock, it will most likely rise further. Why should we buy back stock now when it"s rising?", Mobius said.
The buyback program will take place between January 25th 2011 - March 1st, 2012. After the completion of the program, the share capital of the Fund will be reduced with the face value of the bought back shares. The reduction of the share capital will later be proposed to the Fund"s shareholders.
The shares bought back will be paid out of the distributable profit of the Fund or out of other reserves recorded in the last annual financial statement.
The buyback program was approved by the shareholders of the Proprietatea Fund in the month of September.
• Mobius does not rule out the possibility of listing the Proprietatea Fund on the Asian markets
In the long run, the Proprietatea Fund is looking to get listed on a foreign stock exchange, and is looking at the Asian markets as an alternative.
"Let"s not just look to the West, let"s look to the East, towards Asia, towards countries such as Japan or China that have lots of funds available. We could also get listed in Hong Kong. A major Russian company got listed in Hong Kong and raised billions of dollars", said Mark Mobius, the executive chairman of Franklin Templeton Emerging Markets.
• Varujan Vosganian: The compensation process could be delayed to prevent raising the budget deficit
The Romanian authorities may slow down the process for the compensation of the former owners whose assets were seized by the communist regime, to avoid increasing the budget deficit, said Varujan Vosganian, former Economy and Finance minister.
"In 2007-2008, we paid out 2.3 billion Euros as compensation, and in the next two years, the process will be much slower", he said.
Mr. Vosganian added that another issue that the Fund is facing is whether the current size of the state"s interest in the Fund will be enough to solve all the ongoing compensation files.
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• The derivatives of the Proprietatea Fund, launched on the BSE starting in February
On February 1st, the Bucharest Stock Exchange (BSE) will launch futures contracts having the shares of the Proprietatea Fund as underlying asset, said Stere Farmache the chairman of the BSE.
Futures contracts having the shares of the Proprietatea Fund as underlying asset will be available on the Sibiu Exchange as well.
Referring to the listing of the Proprietatea Fund, Stere Farmache said: "I think this event is just as important, if not more, than the opening of the Bucharest Stock Exchange".
Stere Farmache added that the listing could represent a catalyst and spur other state owned companies, some of them part of the portfolio of the Proprietatea Fund, and which are expected to come to the Bucharest Stock Exchange, but which, for various reasons "show a certain reluctance towards the idea".
The chairman of the Bucharest Stock Exchange also explained that the listing of the Fund could also help bring new practices and trading techniques to the BSE, which could mean a step forward - stock borrowing, short selling.
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The Proprietatea Fund is a closed-end investment fund, created to compensate the people whose properties were abusively seized by the communist state and which can no longer be returned in kind to their rightful owners.
At the end of 2010, through the Ministry of Finance, the state held 38.88% of the shares of the Proprietatea Fund, 38.88% of the shares of the Proprietatea Fund, while the remaining shares were held by 175 companies and investment funds (19.49%) and 5,196 individuals (41.63%).
The NAV of the Proprietatea Fund is 15.38 billion lei, or 1.1124 lei/share respectively.
The Fund holds stakes in 83 private and state owned companies, with electricity, oil and gas representing a large share of its portfolio.
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