LONDON (Reuters) - Romania’s investment fund Fondul Proprietatea is in talks to sell all its stakes in the Romanian subsidiaries of utility companies Enel and Engie, managers of the fund told Reuters.
The $2 billion fund is managed by global investment manager Franklin Templeton, and some 69 percent of the portfolio consists of unlisted, mainly state-owned companies.
The fund’s shares trade at a discount to its net asset value, so to reduce this discount Fondul is seeking to sell some of its company stakes rather than wait for the Romanian government to revive stalled listing plans.
Altogether, Fondul’s stakes in the Romanian units of Italy’s Enel and France’s Engie - equivalent to 12-24 percent of the subsidiaries - accounted for 19.2 percent of the fund’s net asset value at end-June and were worth about $509 million.
“Some of these distribution companies, which are subsidiaries of multinationals, are unlikely to be individually listed,” Johan Meyer, co-chief executive, Romania at Franklin Templeton Investments, and co-portfolio manager for the fund, said in an interview on Tuesday.
Fondul has appointed Ithuba Capital as sole financial adviser for a potential sale of the Enel and Engie holdings, with Meyer saying discussions were “ongoing” with a number of interested parties.
He said there was investor appetite for utility companies as they generate a decent yield, adding it was possible there would be an announcement before the end of the year.
Enel and Engie did not immediately respond to requests for comment.
Fondul has already signed a memorandum of understanding with Electrica, a Romanian electricity power supply and distribution company, to offload its 22 percent stake in Electrica’s subsidiaries for some $193.46 million.
“The next step is for Electrica to get shareholder approval,” said Meyer, adding that subject to this, he expects to make the sale by end of October or beginning of November.
The fund is also looking to sell potentially all of its 49 percent shareholding in Romanian salt producer Salrom, and has appointed UniCredit to look at various options.
On the listings front, Meyer urged the government not to miss a “golden window of opportunity” to benefit from strong global risk appetite, following repeated delays to the planned listing of Romania’s biggest power producer Hidroelectrica.
Fondul would like to sell up to a quarter of its 20 percent stake in the company, and Meyer argued a successful listing could lead to a healthy IPO pipeline, but the government needed to strike while the iron was hot.
“Investors may look at something but if they can’t invest they will go on to the next thing, and they may not have that cash available in 12 months’ time,” he said.
Marius Dan, investor relations director at Franklin Templeton Investments, said the mandate for the banks appointed to execute an IPO had been extended to next August. “We think it’s the ideal moment to list, given the macro backdrop in Romania, the profitability of the company, and there is significant demand for IPOs coming out of Romania.”
Reporting by Claire Milhench; Additional reporting by Stephen Jewkes and Geert de Clercq; Editing by Adrian Croft