The shares of Fondul Proprietatea (FP), the biggest investment fund in Romania, reached an all-time high of RON 1.525 per share on January 25, 2021, the day when the fund celebrated ten years since its listing on the Bucharest Stock Exchange (BVB).

Compared to the first day of trading on the Bucharest Stock Exchange, when the fund’s shares closed at RON 0.6495, the price has increased by 135%.

However, by adding the dividends and capital distributions the fund has carried out over the last ten years (some RON 0.813 per share in total), the return reaches 260%.

An investor who would have reinvested these dividends in Fondul Proprietatea shares would have reached a total return of over 360%, Ziarul Financiar has calculated based on Bloomberg data.

The fund’s listing ten years ago and its subsequent activity have played an essential role in the local capital market’s development, by increasing the market’s liquidity and the corporate governance standards of other listed companies.

Managed by American group Franklin Templeton, one of the biggest asset managers in the world, Fondul Proprietatea has introduced new instruments on the local market, such as buy-back programs (2011), tender offers (2013), and accelerated bookbuild offerings/ ABO (2013), which later become popular among local issuers.

In the last ten years, Fondul Proprietatea has been the top traded stock on the Bucharest Stock Exchange, generating a quarter of the value of equity transactions.

The fund attracted over USD 1.8 billion of new foreign portfolio investments into Romania and significantly increased the country’s visibility among international investors by organizing 22 Investor Day conferences in Romania, London and New York, attending 115 road-shows, and 131 investor conferences, according to a press release issued by Franklin Templeton Investment Management.

Fondul Proprietatea also concluded half of the special transactions (IPOs, SPOs, and ABOs) on the BVB between 2012 and 2020, with a total value of USD 1.1 billion. By selling large stakes in local listed companies such as Transelectrica, Transgaz, Romgaz, and OMV Petrom, Fondul Proprietatea increased their free-float and allowed other big investors, such as local pension funds and foreign investment funds to buy larger amounts of shares, previously unavailable to them.

Looking forward, the fund is prepared to support the listing of state-owned enterprises in the near-term by contributing to the process a part of its stakes in IPO candidates, such as Hidroelectrica.

“The pipeline of listings from the Romanian Government and Fondul Proprietatea has the potential to be a huge catalyst for attracting more investors to Romania, building on the track record of improved corporate governance and transparency. This is the necessary key to unlock the full potential of Romania’s capital market and secure an upgrade to MSCI Emerging Market Status, while at the same time helping the country’s recovery process from the impact of the pandemic,” Franklin Templeton representatives said in the press release.

(Photo courtesy of Fondul Proprietatea)

andrei@romania-insider.com