SIF6, from the minority stakes held by AVAS?

• The chairman of AVAS (The Authority for State Assets Recovery) wants to reunite the shares that AVAS holds in various companies in a new financial investment company, which would be listed on the Bucharest stock exchange

Mircea Ursache, the chairman of the Authority for State Assets Recovery announced yesterday, that he wants to create a financial investment company (SIF) which would manage the 376 minority stakes that AVAS holds in various companies in its portfolio. The newly created company, with a share capital of some 120 million lei (30 million Euros) - the equivalent value of all of AVAS"s minority holdings - is to be listed on the Bucharest Stock Exchange, after the completion of the required steps.

The difficulties that AVAS is having in selling off its minority holdings would justify the creation of that company, according to Mr. Ursache. He feels the state should be a more active player on the domestic capital market.

"The costs involved in the creation of a financial investment company which would manage the minority stakes could be smaller or equal to the one incurred by the specific department of AVAS which handles the management of those interests", said Mr. Ursache, who said that the creation of the SIF would lead to the closing of AVAS"s portfolio management department.

More specific details about the project are far from being definitive at this point, as the chairman of AVAS is due to discuss the issue with the institutions of the domestic capital market.

Brokers feel that the project of AVAS"s chairman is an interesting one, although some questions remain on its implementation.

Octavian Molnăr, general manager of brokerage firm "IFB Finwest", told us that the success of such an initiative will depend greatly on the assets that the portfolio of the SIF will include.

"it depends on how the stakes that the SIF manages will be evaluated. If they will be valued against their face value, then the state might as well forget about the whole thing, given the current market conditions, which are really unfavorable", Mr. Molnăr said.

"There are also questions on how AVAS intends to determine the share price of this new financial investment company. This would demand an IPO and the procedure for setting the starting price is not yet known".

Răzvan Paşol, chairman of "Intercapital Invest" said that AVAS"s project would be a welcome addition to the stock market.

"The stock market needs to have powerful companies listed, and the differences between the assets of the five SIFs already listed on the BSE and those of the company that the chairman of AVAS intends to create will not matter".