London Stock Exchange welcomes Fondul Proprietatea to its Specialist Fund Market
London Stock Exchange today welcomes Fondul Proprietatea (“the Fund”), one of the world’s largest closed-end funds, to the Specialist Fund Market by means of global depositary receipts ("GDRs”).
With a robust track-record of creating shareholder value, Fondul Proprietatea has a portfolio of Romanian equity securities with assets of over €2.9bn and has been listed on the Bucharest Stock Exchange since January 2011.
The Fund was originally set-up in 2005 to compensate Romanians whose properties were seized during the communist regime. Following an international tender process, Franklin Templeton Investment Management Limited was appointed in September 2010 as Fund Manager and Sole Director of the Fund. The Fund currently invests in Romania’s most profitable and largest listed companies such as OMV Petrom (the largest oil producer in Romania), Romgaz (the largest gas producer in the country) and in large unlisted state-controlled infrastructure assets such as Bucharest Airport and the port of Constanta. The Fund also offers exposure to Hidroelectrica, one of the largest European hydro-generation companies, as well as to natural commodities monopolies, such as the Romanian salt mining company Salrom.
Commenting on the listing, Dr. Mark Mobius, Executive Chairman, Templeton Emerging Market Group said: “Today marks a truly historic milestone for Fondul Proprietatea and Franklin Templeton, given that we have worked relentlessly towards this achievement in the past few years. The Fund has the potential of becoming one of the most visible and attractive closed-end funds listed in London, given its size, portfolio and discount to NAV. Moreover, we are convinced that the secondary listing of the Fund on the LSE will increase the visibility of the Romanian capital market on the international scene, will facilitate access of a broader base of foreign investors to the country, and will act as a catalyst towards unveiling Romania’s many other investment opportunities. We have witnessed a huge interest for Romanian companies during our numerous roadshows to raise awareness of the Fund abroad and we are positive that the Fund’s listing on the LSE will increase the appetite of investors for Romanian equities.”
Greg Konieczny, CEO and Fund Manager of Fondul Proprietatea added: “Fondul Proprietatea is ideally placed to offer investors exposure to a diversified range of Romanian listed and unlisted equity securities that should benefit from Romania’s steady growth perspectives and strong economic fundamentals. The valuation of Romanian companies are low compared to surrounding countries and we see this as the perfect timing for investors to access Romania given that it has the lowest price/earnings ratio and highest dividend yield compared to other countries in Central and Eastern Europe. The low correlations between developed markets and Romania, which is a Frontier Market country, indicates diversification benefits for both short- and long-term investors. Our focus as Fund Manager continues to be to maximize returns for the Fund’s shareholders, increase the NAV per Share, and decrease the discount at which the Fund’s shares currently trade. In addition to regular buy-back programmes, cash distributions, and a proactive investor relations programme, we view today’s listing on the LSE as an integral part of our discount reduction mechanism.“
1. As at 20 April 2015.
Fondul Proprietatea, an attractive investment opportunity
- The fund management team, led by investment guru Dr. Mark Mobius, has successfully managed to increase the fund’s share price while narrowing the discount. The Fund is currently trading at 23.6% to NAV, having reduced from over 55% four years ago, while the share price increased by approximately 71% since its initial listing on the Bucharest Stock Exchange.
- Fondul Proprietatea has been executing regular buy-back programmes, passing on dividends and cash distributions to shareholders, totaling almost EUR 1.27 billion EUR since Franklin Templeton started managing the Fund in September 2010.
- Another key component to the strategy is the team’s activist approach to engaging with its portfolio companies, with a view to increasing their profitability, efficiency and corporate governance standards.
- After a series of IPOs – including Romania’s largest gas producer Romgaz SA in November 2013 – 17 of its portfolio companies, representing 48% of the portfolio value, are now listed. There is a strong IPO pipeline of key assets in the portfolio including Hidroelectrica, Bucharest Airports and Constanta Port planned for the next year.
- The Fund is managed by Franklin Templeton Investment Management Limited, a subsidiary of Franklin Resources Inc. which is one of the largest asset management groups in the world, with over 65 years of investment experience, offices in 35 countries and over $880 billion in assets under management.