Romanian investment fund Fondul Proprietatea (BVB ticker: FP) started its fourth share buyback program on Wednesday, October 1. The fund plans to buy back a maximum of 990 million of its own shares, representing almost 8% of its share capital.

The fund’s manager, Franklin Templeton  announced that the fund might also launch a new public offering for its own shares, to accelerate buybacks.

Fondul Proprietatea’s shares reached a new all-time high after the announcement, trading at RON 0.96 per share on Wednesday. At this price, the fund would have to pay some EUR 215 million for the whole buyback program.

Normally, the amount of shares that the fund buys back every day shouldn’t represent more than a quarter of the daily trading volume.

The Financial Supervisory Authority (ASF) may allow this to go up to as much as half of the daily volumes, but no more, so the buybacks are actually dependent on the daily trading on the Bucharest Stock Exchange. This is why the fund's manager wants to accelerate things via a public offer.

Fondul Proprietatea made a similar buyback public offer in November last year, for 600 million of its own shares. The price in the offer was set at RON 1 per share, which was significantly higher than the market price at that time, and was 14 time oversubscribed.

Fondul Proprietatea has spent about EUR 300 million in the last three years on buybacks. The fund bought back almost 1.6 billion shares which were canceled.

The buybacks are aimed at increasing the share price and reducing the discount between the price and the net asset value per share. The current share price, of RON 0.96 is 24% lower than the NAV per share at the end of August 2014, which was RON 1.2639.

The fund has a market capitalization of EUR 2.94 billion.

Andrei Chirileasa, andrei@romania-insider.com