Fondul Proprietatea, a Romanian close-end investment fund trading on the Bucharest Stock Exchange (BVB) is planning a secondary listing in London in May, according to Wall Street Journal.
Franklin Templeton Investment Management Ltd. United Kingdom serves as the sole administrator and fund manager of Fondul Proprietatea. It is responsible for making investment decisions on behalf of the fund.
What can past market crashes teach us about the current one?
The markets have largely recovered since the March selloff, but most would agree we're not out of the woods yet. The COVID-19 pandemic isn't close to being over, so it seems that volatility is here to stay, at least until the pandemic becomes less severe. Q2 2020 hedge fund letters, conferences and more At the Read More
Fondul Proprietatea aims to attract more investors
Grzegorz Konieczny, a portfolio manager of Fondul Proprietatea, said they are hoping to attract more investors through the secondary listing in London. They also aim to boost the fund’s stock price.
The decision of the Fund to list in London came amid the efforts of the Bucharest Stock Exchange in encouraging foreign institutions to increase their investment in the country.
During an investor day in New York last week, Ludwik Sobolewski, CEO of Bucharest Stock Exchange told WSJ Frontiers that the stock market is dedicated to attracting more institutional investors, and to see Romania advance frontier to emerging market status. .
Sobolewski said, “For Romania, achieving emerging-market status would bring considerably more inflows of funds and trigger more investment within the country.”
According to Jaques Tohme, a partner at Ridgewood Advisors, a Romania-focused fund manager, “Corruption has been Romania’s chief obstacle to attracting private investment [but] in the past four years we have seen an unprecedented step-up in Romania’s enforcement of the rule of law.”
Paul Singer’s activism at Fondul Proprietatea
The government of Romania established Fondul Proprietatea in December 2005 to compensate individuals who lost their properties during the communist regimes. Currently, institutional investors own 74%, and private individuals own 26% of the Fund. The Romanian government owns a minority stake of 0.04% after reallocating its initial holdings to eligible claimants.
Paul Singer’s Elliott Associates is the largest investor of Fondul Proprietatea with 19.7% stake as of January. Singer has a team of lawyers in Romania pushing Franklin Templeton to implement measures that would create value and reduce the discount on the Fund’s net asset value (NAV).
Fondul Proprietatea has been trading at a discount to its NAV since it started trading on the Bucharest Stock Exchange in 2011. The discount has been narrowing, and it is currently trading at 27% discount from roughly 40%. Singer’s target is to decrease the NAV discount to 15% in two-thirds of trading sessions between Oct. 1, 2014 and June 30, 2015.
Franklin Templeton aims to achieve that target through the secondary listing in London and a 7.3% shares buyback.