Romania’s Fondul Proprietatea launches secondary listing in London

By bne IntelliNews April 28, 2015

Clare Nuttall in Bucharest -


Romania’s Fondul Proprietate (FP), one of the world’s largest closed-end funds, launched its secondary listing on the London Stock Exchange on April 29. 

Trading stated at £11.50 per GDR on April 29, which fell slightly to £11.45 at the end of the day.  

The fund was originally set up to compensate Romanians who had lost property and other assets under the former communist regime. Its portfolio, with assets worth €2.9bn, includes Romania’s largest oil and gas and power companies, among which are OMV Petrom, Hidroelectrica and Romgaz. It has been managed by Franklin Templeton Investment Management since 2010.

“The fund has the potential to become one of the most visible and attractive closed-end funds listed in London, given its size, portfolio and discount to [net asset value],” said Mark Mobius, executive chairman of Templeton Emerging Markets Group, in an April 29 statement

Mobius added that the fund's listing on the LSE would "increase the visibility of the Romanian capital market on the international scene [and] facilitate access of a broader base of foreign investors to the country".

FP, which has been listed on the Bucharest Stock Exchange (BVB) since 2011, is currently trading at 23.6% discount to net asset value (NAV), down from over 55% in 2011, the fund said. Its share price has increased by around 71% since its initial listing on the BVB.

“Our focus as fund manager continues to be to maximise returns for the Fund’s shareholders, increase the NAV per share, and decrease the discount at which the Fund’s shares currently trade ... we view today’s listing on the LSE as an integral part of our discount reduction mechanism,” said Grzegorz Konieczny, CEO Romania and director of Eastern European strategy and Templeton Emerging Markets Group.

“Fondul Proprietatea is ideally placed to offer investors exposure to a diversified range of Romanian listed and unlisted equity securities that should benefit from Romania’s steady growth perspectives and strong economic fundamentals,” Konieczny added.

The fund announced on April 20 that it planned to apply for admission to trading to the LSE’s Specialist Fund Market for its Global Depositary Receipts (GDRs), with the GDR facility to be limited to one-third of its issued share capital. FP appointed the Bank of New York Mellon to act as the depositary bank for its GDRs for the secondary listing.

FP’s London listing follows the recent dual IPOs of major Romanian companies - electricity distribution company Electrica in 2014 and gas company Romgaz in 2013 - in Bucharest and London. 

Currently, 17 of FP’s portfolio companies, representing 48% of the portfolio value, are listed, and there are plans to hold IPOs of other companies including Hidroelectrica, Bucharest Airports and Constanta Port, though no IPOs are expected this year.

FP’s London listing was expected in 2014, but has been repeatedly delayed by regulatory hurdles within Romania. In a July 2014 interview with bne IntelliNews, Konieczny said all preparations from the FP side would be ready by the end of the summer but the date has since been pushed back.

On April 9, Romania’s Financial Supervisory Authority (ASF) announced it had approved a new regulation allowing local issuers to carry out secondary listings on foreign exchanges using depositary interests instruments, finally opening the way for FP to go ahead with its LSE listing. 

The ASF said it had “taken note of the comments of [the Bucharest Stock Exchange] related to the potential risk of migration of transactions for strategic Romanian companies of the Proprietatea Fund’s portfolio on the London Stock Exchange”, but added that “as a general rule migration takes place in the other direction”.



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