Which BSE shares did the Pilon II funds trade in the first half of the year?

The Pilon II private pension funds, to which employees in our country contribute 4.75% of their gross monthly income, bought Hidroelectrica, Romgaz and BRD-Groupe Societe Generale shares in the first six months of the year, but sold their holdings in Banca Transilvania and OMV Petrom, according to our calculations based on the reports of the managers of the seven funds.

On the one hand, the moves were dictated, in part, by a legislative limitation according to which the funds can invest only 5% of assets in the shares of a company where the state has a participation of less than 50% of the capital. On the other hand, with the increase in contributions this year and the continuous increase in the incomes of employees in our country, the pension funds receive more and more money every month that they have to invest.

Thus, the strong appreciation of the price of some of the main shares on the Bucharest Stock Exchange, where the BET-TR index had a 25% increase in the first half of the year, meant that for some funds, the investment in Banca Transilvania and OMV Petrom reach or exceed the threshold of 5% of assets. Instead, according to the legislation, the funds can invest up to 10% of assets in companies where the state holds more than 50% of the shares, thanks to a legislative amendment operated before the Hidroelectrica offer to facilitate the success of the listing of the electricity producer and supplier only on the BSE.

• The value of Pilon II's investment in Banca Transilvania increased, even though the funds sold securities of the credit institution, due to the appreciation of the share price

The value of the investment of the seven mandatory private pension funds in Banca Transilvania shares was 6.72 billion lei, in the middle of this year, over the value of 5.12 billion lei at the end of last year, even if the sales of the funds made the share of their investment in the bank's capital to decrease slightly, from 26.44% in December 2023 to 26.29% in June this year.

It is the effect of the strong increase in the bank's share price, of 31.9% in the first six months of the year, which counterbalanced the views of the funds managed by Metropolitan Life and BRD Pensii, whose holdings in Banca Transilvania are around 4.9% of assets , as well as the sales of the fund managed by BCR Pensii. Moreover, in the case of the Aripi and AZT Vitorul Tău funds, the investments in the shares of the credit institution from Cluj are around 4.9% of the assets, which means that a continuation of the increase in the price of the bank's securities will also require sales from these funds.

At the opposite pole, the Vital fund, managed by Carpathia Pensii, bought over 4.2 million Banca Transilvania shares, increasing its holding in the capital of the credit institution from 1.78% in December 2023 to 2.31% in the middle of this year .

• The increase in the OMV Petrom quotation brought the value of the investment of pension funds in the company to 6.3 billion lei, compared to 4.9 billion lei in December 2023

OMV Petrom became the second most important BSE company in Pilon II portfolios in terms of investment value, also due to the increase in the share price, given that, as a whole, pension funds sold securities of the oil and gas producer, in the first six months of the year.

Thus, the funds managed by Metropolitan Life and NN Pensii, whose investments in OMV Petrom amounted, in June, to almost 5% and 4.9% of assets, respectively, decreased their holdings in the company, probably in the context of reaching the limit provided by legislation, while the Aripi fund and the one managed by BCR Pensii bought much smaller amounts of shares.

In the first six months of the year, the shares of the oil and gas producer marked an increase of 33.1%, which made the value of Pilon II's investment in OMV Petrom shares reach 6.3 billion lei, compared to 4.9 billion lei in December last year.

• No fund sold Hidroelectrica or Romgaz shares

Hidroelectrica reached the third investment value among BSE companies in Pillar II portfolios, respectively 6.1 billion lei, compared to the end of last year when it was in the first position with an investment value of 5.7 billion lei, the increase coming from from fund purchases.

In the first six months of the year, the funds managed by BCR Pensii, BRD Pensii, Metropolitan Life and NN Pensii bought Hidro shares, while the other three funds kept their positions unchanged. Thus, Pilon II's cumulative holding in the electricity producer and supplier increased from 9.92% in December 2023 to 10.88% in June this year, during which the share price had a decrease of 2.6%, which includes ex-dividend correction.

Hidroelectrica is 80% owned by the Ministry of Energy, so the funds still have room for purchases.

Romgaz, another majority state-owned company, was on the Pillar II radar, with five of the seven mandatory private pension funds buying shares in the gas producer in the first half of the year, during which the share price rose 18.9%.

• Pillar II funds still have room for purchases of BRD shares

The value of Pilon II's holdings in BRD-Groupe Societe Generale increased from almost 2.21 billion lei in December last year to 2.67 billion lei in June this year, both due to the appreciation of the share price and the acquisitions made by five of the seven funds of compulsory private pensions.

The fund managed by NN Pensii has maintained its package since the end of last year, and the fund managed by BRD does not own shares of the bank. In the case of BRD, Pillar II investments are significantly below the threshold of 5% of the funds' assets, so that, in theory, there is still room for growth.

• No funds bought FP shares

Four of the seven mandatory private pension funds, namely Aripi, Metropolitan Life, the one administered by BCR Pensii and the one administered by NN Pensii, sold Fondul Proprietatea shares in the first six months of the year, without any of the other funds increasing their investment in society.

Thus, the ownership of Pilon II in the first half of the year in FP decreased from 17.92% in December last year to 14.12% in June 2024, given that the importance of the fund on the BSE decreased considerably after the sale of the stake in Hidroelectrica. In addition, the capitalization of any of the remaining holdings in the portfolio depends on the goodwill of the state, which, through the Ministry of Finance, requested in the spring "the preservation of the current managed portfolio" in order for "the fund to develop a strategy based on a solid portfolio of holdings", so that a new listing seems unlikely in the near future.

At the end of June, three Pillar II funds, namely Aripi, the one managed by BCR Pensii and the one managed by NN Pensii had 7.97% of Premier Energy, the only IPO on the Main Market of the Bucharest Stock Exchange carried out this year, the most large package, 5.56% of the company, belonging to the NN fund.

• Metropolitan Life entered into the shareholding of Aquila and Sphera; Vital invested in One United securities

Metropolitan Life became a shareholder of Aquila and Sphera Franchise Group, in the first half of the year, at the end of June, the fund had 3.47% of the distribution and logistics company for the consumer goods market, a package worth 50.6 million lei , while the holding in the operator of public food chains amounted to 38.8 million lei, respectively 1.66% of Sphera.

The Vital Fund, managed by Carpathia, became a shareholder of the real estate developer One United Properties, having a 2.09% stake in the company at the end of June, worth 70 million lei. On the other hand, the fund managed by BCR exited the Alro Slatina shareholding, where it had a 0.32% stake in the aluminum producer, at the end of December last year.

At the end of June, the net assets of mandatory private pension funds had reached a new historical record of 143.2 billion lei, about 65% of the money being placed in Romanian government securities, almost 5% in bonds and 25% in shares, respectively 36.3 billion lei, according to the data published on the site desprepensiiprivate.ro.

In the first six months of the year, the Pillar II funds had nominal returns of 6-7%, while in the period June 2024 - June 2023, the returns were 16-17%, compared to an inflation expressed by the Consumer Price Index of 4.9% in June this year compared to June last year, respectively 2.6% compared to December 2023.

The increase was based, first of all, on the exceptional evolution of the main shares from the Bucharest Stock Exchange, included in the BET index, in which mandatory private pension funds invest over 90% of the funds placed in shares.

According to a press release from the Association for Privately Administered Pensions in Romania (APAPR) from May, in sixteen years of activity, Pillar II funds had recorded an average return of 7.8% per year, among the highest in Europe and the OECD during that period.