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.
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%.
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