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May 28, 23:35

Manager ends rumors: Fondul Proprietatea can’t sell its whole stake in Romania’s OMV Petrom in one go

Romanian investment fund Fondul Proprietatea (BVB ticker: FP) hasn’t changed its strategy for its stake in oil&gas company OMV Petrom but will give concrete information on a potential transaction when time will come, said Greg Konieczny, FP’s fund manager. He also said that those who spread the rumors last week that FP would sell its whole stake in Petrom are misinformed.

“The speculations from last week are unfounded. We have a limit of 20% of our net asset value that we can sell or buy in one transaction. Petrom makes 35% of our portfolio and we don’t have shareholders’ approval to sell the whole stake. Those who spread these rumors should first do their homework,” Konieczny said.

This is the first public reaction from Fondul Proprietatea’s manager after rumors last week that FP will sell its entire stake in Petrom. This led to speculations on the Bucharest Stock Exchange, where OMV Petrom (SNP) shares lost 3% in two days, while FP shares gained more than 7% in three days.

The 19% stake that Fondul Proprietatea currently holds in OMV Petrom is the fund’s largest asset, representing 35% of its net asset value (NAV). This is EUR 1.18 billion of a NAV of EUR 3.39 billion, as of end – August this year.

Greg Konieczny, who has been managing Fondul Proprietatea for the last four years as a representative of American group Franklin Templeton, said the fund’s strategy hasn’t changed and that it is still looking for strategic options to reduce its stake in OMV Petrom to under 15%, which is what the fund announced in March this year.

Fondul Proprietatea has sold some of its listed holdings in the last two years, to finance its share buyback programs, which were aimed at increasing the fund’s share price and reducing the discount to its NAV per share. FP sold 1.1% of OMV Petrom in May 2013 and 5% of Romgaz in June this year. The fund also sold its entire stakes in Transelectrica and Transgaz.

The sale of a larger share package in OMV Petrom has been anticipated by the market since the beginning of this year. The fund has few other options for quick exits, as a large part of its portfolio is still made of unlisted companies. At the end of August, unlisted holdings represented 42% of the fund’s NAV.

“We hope to  significantly reduce our unlisted holdings in the next 12-18 months,” said Konieczny. The fund could achieve this either through listings of large state-owned companies in which Fondul Proprietatea holds minority stakes, or by selling some unlisted holdings. The fund has had little success in selling its minority stakes in privatized electricity or gas distributions so far.

Konieczny said that Fondul Proprietatea is interested in selling its minority stakes in the local subsidiaries of Italian group Enel and will negotiate with whoever will buy these companies from Enel. He also hopes the new board of electricity distributor Electrica will analyze the fund’s proposals on its possible exit from Electrica’s subsidiaries, either through a cash transaction or through a share swap.

Andrei Chirileasa, andrei@romania-insider.com

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