Sebastian Bodu, University Professor: "All self-respecting states have a sovereign fund; it would be a shame if we didn't have one"

All self-respecting states have a sovereign investment fund and it would be a shame if we didn't have one, said university professor Sebastian Bodu, who worked on a project in 2020, in the Orban Government, to establish a sovereign fund in our country.

Sebastian Bodu stated: "It departed from the Ordinance given by the Dragnea Government, from which we moved away somewhat because a focal point of that ordinance was for a development and investment fund to manage, under its dome, all the state's participations in economy. We were not interested in that aspect, so we made a Government Decision that stipulated that the respective fund should only carry out the activity of investments, respectively private equity. At that time, I considered that Romania needed a private equity financing aimed at SMEs. The market suffers from the lack of an element to compensate for financing from credit institutions, when it is not available, and this pillar is private equity, which is almost non-existent in Romania. The Sovereign Fund would have filled a gap felt in the financial market in Romania, being thought to have undetermined percentage stakes, and the financing would have come from the Jeremy project that had just ended. It was about 100 million euros".

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The university professor added: "The fund, as an investor in various private capital companies, would have aligned itself with pension funds that have very large sums and that can make investments in financial instruments other than government securities or bank deposits . They can risk a bit more, and the pension funds would have been willing to invest alongside the Sovereign Fund in these commercial companies that the fund identified, evaluated and determined if they were companies worth investing in. The pension funds were very receptive to the idea".

According to Mr. Bodu, another pillar of the investment process was that once the companies had access to private equity and investment from pension funds, they would in turn attract bank financing.

"Unfortunately, the project got stuck because someone who wasn't initially involved saw it as interesting at some point, took it over, a Government Decision was made and it failed there, which was predictable from my point of view", said Sebastian Bodu. "All self-respecting states have a sovereign fund, it would be a shame if Romania didn't have one. We wanted this investment fund to have an advisory board next to it, which would decide on medium and large investments, which would be totally independent. People entered there who were beyond any suspicion that they could come for a sinecure".