Paul Singer today reported that Elliot Associates increased its stake in US$3.1 Billion Romanian investment fund Fondul Proprietatea, the largest closed-end fund in the world, to 20.01%. Elliot is the largest shareholder of the fund, and the position represents one of the largest positions in its portfolio. The fund currently trades at a 25% discount to the Net Asset Value.
Franklin Templeton, who acts as the fund’s manager, announced last week that they are completing a secondary listing in London. The aim of the listing is to promote liquidity and broaden the fund’s investor universe.
This year the fund plans to return to shareholders at least RON1.6 Billion (US$450 million) via buybacks and share capital reduction. RON0.05 per share distribution is expected by the end of June via the reduction of the nominal value of the fund’s shares to RON 0.9 (6% DIVY).
In his Q3 letter – Paul Singer provided an update to investors about Fondul, stating:
The price of Fondul Proprietatea, a closed-end fund listed on the Romanian stock exchange, rose during the quarter, accompanied by a narrowing of its discount to net asset value from 32% to 25%. In early July, the fund completed a significant asset disposal, generating additional cash for deployment toward share buybacks and other distributions to shareholders. The partial return of the shares’ nominal value to each shareholder was paid, as expected, in late July. The fund completed its third share buyback program during the quarter and launched a larger fourth program in late September. The fund manager also announced that a tender buyback would be considered in order to accelerate this fourth buyback program. In addition, a resolution proposing a fifth program was included on the agenda of a shareholders’ meeting to be held in November.
In other developments, the fund manager recently held discussions with its local regulator concerning modifications to current regulations necessary to permit the secondary listing of the fund on the London Stock Exchange, which has already received shareholder approval. Finally, a new two-year management contract for the fund manager became effective September 30, which formally incorporated a target discount to net asset value of 15% as proposed by Elliott.