Fondul Proprietatea

Fondul Proprietatea

Fondul Proprietatea (“the Fund”) (Bloomberg: FP RO) is an alternative investment fund , incorporated as a joint stock company in Romania, listed on the Bucharest Stock Exchange (symbol: FP) and managed by Franklin Templeton International Services S.a.r.l since 1 April 2016. From September 2010 until March 2016, the Fund was managed by Franklin Templeton Investment Management Ltd. UK Bucharest branch. Franklin Templeton Investment Management Limited, the investment manager of the Fund since September 2010, is a subsidiary of Franklin Resources Inc. [NYSE:BEN], a global investment management organization operating as Franklin Templeton Investments with more than 60 years of investment experience and over USD 732.1 billion in AUM as at 30 June 2016. The Portfolio Manager, Grzegorz Konieczny, is supported by a team of 31 employees, including 5 locally based investment professionals who are further supported by the 35 portfolio managers and analysts of the wider Templeton Emerging Markets team.
The Fund was established in 2005 by the Romanian State with the special purpose of providing compensation to individuals whose real property assets were illegally confiscated by the Romanian Communist regime, and which can no longer be returned in kind. The initial sole shareholder of the Fund was the Romanian State. Since the Fund’s launch, the shares have been gradually awarded by the National Authority of Property Restitution to individuals legally entitled to receive compensation and who elected to convert their compensation entitlements into shares issued by the Fund. As a result, the Romanian State’s participation in the share capital of the Fund has continually decreased to 0.04% of the Fund’s paid-up share capital as at 30 June 2016. 20% of the Fund is held by Romanian private individuals, 14% by Romanian institutionals, 25% by foreign institutional investors, and 34% by the Bank of New York Mellon, the depository bank for Global Depository Receipts. Foreign private individuals own 4% of the Fund, while 3% is held by the Fund through treasury shares acquired through the sixth buy-back program. The buy-back programs are aimed to reduce the Fund’s discount and thus returning shareholder value.
The Fund has been listed on the Bucharest Stock Exchange since January 2011 and on the London Stock Exchange since April 2015. Since its listing in Bucharest, the Fund has been the most liquid stock, with an average daily trading volume of USD 4.1 million.
The portfolio is heavily weighted towards the electricity, oil and gas sectors (approx. 76% of the Fund’s 30 June 2016 NAV), through a number of listed and unlisted Romanian companies with particular emphasis on the local energy sector. Net cash and receivables which include includes bank deposits, current bank accounts, short-term treasury bills and bonds, guarantee deposit for tender offer, dividend receivables, as well as other receivables and assets, net of all liabilities (including liabilities to shareholders related to the returns of capital and dividends from previous years) and provisions, accounted for 10.9% of the Fund’s NAV.
• The largest unlisted company is Hidroelectrica (44.3% of the total value of unlisted companies in the portfolio as at 30 June 2016).
• The largest listed company is OMV Petrom (82.0% of total value of listed companies in the portfolio as at 30 June 2016).
In the absence of exceptional market conditions or circumstances, and subject to any restrictions under Romanian legal or tax regulations, the Fund Manager intends to recommend to shareholders an annual cash distribution related to each financial year equivalent to 100% of the sum of the Fund’s dividend income from portfolio companies plus interest on cash balances less expenses and taxation and less compulsory allocations to reserves according to the regulations in force, in each case for that year. The cash distributions would be paid to shareholders either in the form of a return of capital (by decreasing the nominal value per share) or in the form of dividends. The Annual Cash Distribution Policy does not limit additional cash returns and share buy-backs that can be recommended by the Fund Manager separately.
For more information on Fondul Proprietatea, please visit www.fondulproprietatea.ro.