Only a regulator’s decision stands between Romanian Fondul Proprietatea and its London listing

The Romanian Financial Supervisory Authority (ASF) is the last one to draft the rules that would allow listing Romania’s Fondul Proprietatea investment fund on the London Stock Exchange, after the fund manager Franklin Templeton has finalized documents needed for the listing.

The paper work is ready to be filed as soon as the ASF endorses changes in regulations allowing the use of Depository Interests (DIs). These  are financial instruments that allow listing a foreign company on the London Stock Exchange, Franklin Templeton announced.

DIs are somewhat similar to Global Depository Receipts (GDRs), which are also used by foreign companies for their listings in London. Two Romanian companies have already issued GDRs and are currently listed on the London Stock Exchange: gas producer Romgaz and electricity distributor Electrica.

Fondul Proprietatea’s shareholders approved the secondary listing of the fund on the London Stock Exchange in April this year. This operation is part of the fund manager’s strategy to increase its share price and reduce the discount at which FP shares are trading compared to its net asset value (NAV) per share. FP shares reached new all-time highs last week and are currently trading at a 26% discount to its NAV per share.

The main target of Franklin Templeton’s new mandate, which is to start at the end of September 2014, is to bring this discount under 15% and keep it as low as possible. For this, the fund manager will continue share buyback programs, but it also needs additional demand for the share, which it hopes to get with the London secondary listing.

Fondul Proprietatea is the largest investment fund in Eastern Europe, with net assets of EUR 3.39 billion, invested mainly in oil&gas, electricity, utilities and transport companies. The fund currently has a market capitalization of EUR 2.87 billion.

Andrei Chirileasa, andrei@romania-insider.com

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