Fondul Proprietatea is a Romanian energy fund with $4.4 billion in assets and is managed by Franklin Templeton. Paul Singer’s Elliott Associates is the largest shareholder in the fund, with a 15.2% stake valued at over $600 million. It is also Elliott’s third largest equity position.
See Elliott’s Q2 letter to investors here
Paul Singer’s activist investment in Fondul Proprietatea
Elliott Associates is taking an activist approach to this investment. They have a team of lawyers in Romania that put pressure on Templeton to deliver a proper investment return. It has worked well so far, as Fondul Proprietatea is up 37% in the last 12 months. In addition to this, Elliott collected 7% in dividends in the period, bringing the total return to 44%.
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Today Romanian broker Swiss Capital reported that local media mentions that FP RO may sell its entire 19% stake in OMV Petrom (SNP RO) in the next few days. FP’s stake in SNP RO is currently valued at $1.4 billion. The transaction would be the largest deal to date on the Bucharest Stock Exchange.
OMV Petrom’s stake in Fondul Proprietatea
SNP’s stake represents 35% of Fondul’s NAV. If this rumor is true, the FP’s cash balance would increase to 43% of NAV. This would indicate significant buyback acceleration. Shares now trade at a 28% discount to NAV. At current prices, FP would be able to buy around 60% of its outstanding shares. If this rumor is true, Paul Singer’s activism will bear fruits. His reported transaction may indicate that something is in progress.
A spokesperson for Elliott did not respond to requests for comment.
Disclosure: The author of this piece has a long position in Fondul