THE "BUFFETT SYNDROME" IS CATCHING ON Major investors courting Romanian railway companies

Major foreign investors have intensified negotiations with Romanian railway companies lately.

Broker Adrian Simionescu, one of the most important investors in the domestic railway industry and a member on the Board of "Grupul Feroviar Român" (Romanian Railway Group - ed. note), the majority shareholder of "Remar" Paşcani, said: "There are ongoing talks. Major groups like < Siemens >, < Alstom > and < Bombardier >, as well as many private equity funds are interested in such acquisitions. I have to admit that negotiations in this respect have become more intense after the spectacular acquisition of Burlington Northern Santa Fe Corp by < Berkshire Hathaway >, the company owned by billionaire Warren Buffett. State Owned Transportation Companies of Austria, Germany and Russian Federation, are also interested in expanding in Europe, with Romania being an object of their interest as well". He said there are rumors that "Siemens" turned to other European railway operators after negotiations with "Astra Vagoane fell through.

"< Bombardier >, one of Siemens" traditional partners, but also its competitor, has ongoing negotiations which are already at an advanced stage with one of the local train car makers", the broker said, without giving any names.

Adrian Simionescu is the chairman-general manager of "Vienna Investment Trust", the brokerage firm which in mid 2008 was appointed to help move "Remar" Paşcani to the main tier of the Bucharest Stock Exchange.

Adrian Simionescu added that the transfer of "Remar" to the main tier of the regulated market is delayed because the current market environment is not favorable: "The timing has to be right. On principle, there should be no issues with transferring < Remar > to the upper tier of the stock exchange, because it is already listed on the Rasdaq tier and it is simply a matter of upgrading its status, instead of an initial listing. I have to admit the market conditions are not appropriate".

The head of "Vienna Investment Trust" admits that other companies had similar plans, but they were forced to postpone them or gave up on them completely: "We had also had four Initial Public Offerings planned for 2008, but they were put off until 2009, when they were postponed again. Out of those four companies, two of them gave up on their plans to get listed on the Stock Exchange. In the case of one of them, the shareholders secured an exit by selling to a private-equity fund, and most likely something similar will happen with the second company, and the chances of IPOs for those companies are dropping considerably. Most likely those IPOs will be postponed at least two or three years. What"s more, an increasing number of companies are becoming interested in getting listed on foreign markets, where there is greater liquidity, there are far more institutional investors and there are better prospects of raising capital through an IPO".

However, Adrian Simionescu expects that "Remar" will successfully be transferred on the main section of the Stock Exchange in the second half of the year, if market liquidity improves. The head of "Vienna Investment Trust" said: "Stockholders of "Remar" did not go back on their decision to list the company on the main tier of the stock exchange, but this operation is strictly subject to market conditions. Remar currently meets all the requirements to get promoted on the main tier of the Stock Exchange".

Railways are the second largest holding in the portfolio of Adrian Simionescu, who is a long term investor in the sector: "I believe in long term investments. I own stock in < Remarul 16 Februarie >, and I hold larger stakes in < Remar > Paşcani, REVA Simeria, < Atelierele CFR Griviţa > and < Romvag >. I was very happy with having picked railway companies, after Warren Buffett made a major acquisition in this sector a few months ago. I bought shares of railway companies a few years ago. Like him, I feel that it is a sector which has major potential".

Five big private railway:" Remar" Paşcani, "Remar 16 Februarie" Cluj Napoca, "Romvag" Caracal, "Atelierele CFR Griviţa" and "Reva" Simeria. Their total capitalization is approximately 208 million lei (EUR 50 million).