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UPDATE 1-Romanian Fondul shareholders approve new term for manager Franklin Templeton
September 23, 2014 / 2:20 PM / 3 years ago

UPDATE 1-Romanian Fondul shareholders approve new term for manager Franklin Templeton

3 Min Read

* Templeton gets new two-year term as Fondul manager

* Awaits approval for London listing, share buyback (Adds Templeton comment, shareholder, details)

By Luiza Ilie

BUCHAREST, Sept 23 (Reuters) - Romania's Fondul Proprietatea is waiting for regulatory approval to launch a secondary share listing in London and a new programme to buy back its shares from the Bucharest Stock Exchange, its manager said on Tuesday.

The 3.4 billion euros ($4.4 billion) fund, created to compensate Romanians whose assets were seized under communism, holds minority stakes in a slew of state-owned companies, some of which are unlisted.

Fondul shareholders - led by their largest, billionaire Paul Singer's Elliott Associates - have been pushing Templeton since it took over managing the fund in 2010 to narrow the discount between its net asset value and its stock price.

On Tuesday, shareholders gave Templeton a new two-year mandate as manager, but at half the length of its current term, which expires on Sept. 30. They also attached stringent performance criteria, related to bringing down the discount.

Templeton has pushed successive governments in the European Union's second-poorest state to reform outdated, inefficient state-owned businesses.

It has cut the number of unlisted companies in its portfolio to 38, while also selling minority stakes in listed utilities like oil and gas group Petrom, gas and power grid operators Transgaz and Transelectrica and gas producer Romgaz.

It has also been buying back its shares, reducing the discount to 26 percent from 55.7 percent in 2011.

"If the discount goes down significantly, we will be buying something more than our shares," Fondul manager Grzegorz Konieczny told reporters.

Templeton is waiting for Romanian financial regulator ASF to approve its paperwork for a secondary London listing this fall, and a new programme to buy back roughly 7.3 percent of its Bucharest shares.

"I believe next year we will see the NAV discount narrowing below 10 percent," said Jan Martinek, a Fondul shareholder based in Prague, adding he saw a 45 percent return on investment over 12 months from share price gains and dividends.

"Paul Singer's involvment in Fondul is highly beneficial for all Fondul shareholders."

Konieczny said the London listing will widen the pool of investors for both Fondul and other Romanian assets. He said more gains could come from initial public offerings of state firms, initially planned for this year but postponed for 2015.

IPOs include state power producers Hidroelectrica and Oltenia. Minority listings of the port of Constanta in southeastern Romania and Bucharest airports could follow.

Fondul shares were quoted at 0.9220 lei per share on Tuesday, down 1.2 percent on the day but not far off a record high hit earlier this month. (1 US dollar = 0.7757 euro) (Reporting by Luiza Ilie; Editing by Ruth Pitchford)

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