The birth pains of a project: the Romanian sovereign investment fund

• Frequent hurdles for the state"s investment fund

• The optimistic version: The National Investment Fund could take another seven months to become operational

• Seven months, six weeks and five days...

The Government"s major project - The National Investment Fund, pops up every now and again, and a few months later we are told it is still in an "incipient" stage....

Seven months...

The idea of a sovereign fund for the state first came up seven months ago, in September 2009, but the break-up of the PDL- PSD government caused it to be left to collect dust somewhere in the drawers of the Government. The plan was to put up all of the state"s holdings in one big investment fund (with the initial name scheduled to be the Romanian Investment Fund) which would allow the stakes to be sold on the stock market, help the companies which were facing troubles and supporting the Government"s economic and financial policies. The fund would have become the largest investor on the Romanian capital market, with the added benefit that unlike public institutions, it could sell its stakes far easier, and it would have offered real information about the economy and companies which had potential. The initial financing for the creation of the fund was supposed to come from CEC Bank and the NBR"s forex reserves

• ...six weeks...

The new Boc government rediscovered the project, but (even though this was only done on a conceptual level) it resized it, to only include the stakes of the Ministry of the Economy and of AVAS. As a result, it changed its name, which also followed several steps. At first it was supposed to be called the National Investment Fund. As the initials of its Romanian name were the same as the ones of the infamous FNI mutual fund, the Government quickly changed its name by swapping the last two words around. Which would change its name to "the Fund for National Investments". Of course it was just a buzzword. It was rumored it would start up with a portfolio of EUR 1 billion. This time, nothing about the fund being funded with money from CEC Bank or from the forex reserves.

Six weeks ago, the Minister of the Economy, Adriean Videanu, announced that the project would be reviewed by the Government for the first time.

• ...five days.

Five more days have gone by, to push the play on the name of the movie by Cristian Mungiu further, and sources from the Ministry of the Economy claim that the project is still at a "very early stage": The Office for Privatization and State Holdings (OPSPI) and AVAS (The Authority for State Assets Recovery) have only just set up an inventory of the state"s holdings in various companies. The full list of those stakes had already been done seven months ago, and was included in an appendix to the old project.

Not a word this time about the beginning of the evaluation procedures.

In order for the Fund to become reality it will take many months of hard work and the passing of several government bills.

The same sources say that after the approval of the project to create the fund, several other steps need to be performed. The approval of the methodology concerning the sale of the assets, the evaluation of the assets, and securing the needed financing.

Yesterday, the information that the NBR and CEC Bank would be involved in the new fund resurfaced...

We"ve gone back in time seven months... Why did it take the government so long to uncover again what had already been on the table for several months?

• ...and another seven months will probably go by...

All these operations will require a lot of time and many public calls for tenders (to appoint the evaluators and the intermediaries for the IPOs). The selection of the evaluators and of the intermediaries will take 3-4 months, sources from the OPSPI say. The funds raised by selling off the state"s holdings would be used to finance investments.

There are rumors circulating through the Ministry of the Economy that a quick evaluation of the minority stakes of the government was made three years ago, just prior to the crisis. At the time, the state could have made three billion Euros by selling off its holdings, instead of the one billion it now hopes to make by creating the fund.

The way things are going, there is every chance of this anti-crisis project going through in about seven months, and becoming fully operational in about two or three years, when the crisis will have already passed.

After all, this wouldn"t be a surprise - the Proprietatea Fund is still waiting to be floated on the Bucharest Stock Exchange - four years, three months and two days after its creation...