Romania’s Fondul Proprietatea reaches historic milestone as the share price matches the net assets per share

Fondul Proprietatea (FP), the biggest investment fund in Romania, listed on the Bucharest Stock Exchange and London Stock Exchange, reached a historic milestone on Wednesday, May 12, when its share price matched the net asset value (NAV) per share.

The FP shares went up by 2.71% on Wednesday and closed at an all-time high of RON 1.818 per share. The fund’s NAV per share was RON 1.8166 at the end of March, according to the latest public data available. Thus, this is for the first time since the fund’s listing on the Bucharest Stock Exchange (BVB), in January 2011, when the fund’s shares are not trading at a discount.

Ten years ago, just after the listing, Fondul Proprietatea’s shares were trading 60% under the NAV per share. Since then, the fund’s shares are up more than fivefold, not including the cash distributions.

In the last month, Fondul Proprietatea’s shares have gained 7%, and the year-to-date increase stands at 25%. Thus, the fund has beat the BVB’s blue-chip index BET, which is up 4.8% in the last month and 20% year-to-date.

The fact that Fondul Proprietatea’s shares are no longer trading at a discount is somewhat surprising, given that most of its portfolio currently consists of stakes in unlisted state-controlled companies. The recent evolution of the FP shares may reflect the investors’ expectations for the listing of state-controlled power producer Hidroelectrica, which is the biggest holding in the fund’s portfolio. The 20% stake Fondul Proprietatea holds in Hidroelectrica represented over 51% of its net asset value - EUR 2.2 bln at the end of March.

Romanian investors held over 60% of Fondul Proprietatea’s voting rights at the end of April. For comparison, two years ago, foreign investors held 57% of the voting rights.

Created by the Romanian Government in 2005 to compensate the people whose properties were illegally confiscated by the communist regime, Fondul Proprietatea has been managed by US group Franklin Templeton since September 2010.

(Photo source: BVB)