Bucharest Stock Exchange posts 25% higher profit

The Bucharest Stock Exchange (BVB), Romania’s main capital market operator, increased its turnover by 11% in 2014, to EUR 6.04 million. The net profit went up by 25%, to EUR 2.68 million, according to the BVB’s preliminary results. The operator’s revenues were positively impacted by a higher volume of transactions. The value of share trading on the BVB went up by 14% last year compared to 2013, to almost EUR 3 billion. Part of this increase came from the EUR 444 million initial public offering of state-owned electricity distributor Electrica (BVB ticker: EL). Fondul Proprietatea, the largest investment fund in Romania, also contributed via its repurchase program and its sale of several stakes in electricity transport company Transelectrica (TEL) and gas producer Romgaz (SNG). BVB’s management also tried to push for higher transactions, by offering some benefits for market makers and by lowering fees for share trading, starting October 2014. BVB also introduced new trading phases and eliminated the requirement that shares be traded in blocks, to increase liquidity. However, these measures haven’t led to a significant surge in trading, as the local market is still largely dependent on institutional investors, especially foreign funds. The number of individual investors has been relatively constant over the past years. BVB’s shares gained some 30% over the last three months, as the Government decided to lift the maximum ownership threshold from 5% to 20%, at the end of last year. This allowed BVB’s major shareholders to consolidate their holdings. Investment and pension funds managed by ING and Erste, Romanian investment funds SIF Transilvania, SIF Moldova, SIF Oltenia and SIF Muntenia and Franklin Templeton’s funds were among BVB’s largest shareholders in January this year. EBRD also had a 5% stake in the market operator. The BVB is currently valued at some EUR 67 million (as of February 10, 2015), which is 25 times its net profit and 11 times its turnover. Andrei Chirileasa, andrei@romania-insider.com