Romanian energy fund Fondul Proprietatea announced that it started its 4th buyback round on 1 October. This time the fund aims to buyback 990 million shares, which represents 8% of the capital. With current daily volumes of around 15 million shares, the buyback represents about three months of trading volumes.
In the previous buyback rounds Fondul was allowed to buyback 25% of daily trading volumes. I spoke to the brokers, and Fondul was actually buying these volumes. For the 4the round Fondul got permission to buyback up to 50% of daily volumes. This is very significant buyback by any measure that should drive up the Fondul price.
Franklin Templeton that manages the fund has a strong motivation to drive up the Fondul price. In September shareholders passed a resolution based on which the fund manager faces termination of the management contract if the NAV discount does not decrease to 15% (from current 25%) in two thirds of trading sessions between October 1, 2014 and June 30, 2015. To comply with this the Fondul share price needs to rice another 13% to 1.07 Ron per share. Looks like the Templeton is working hard to achieve this mission.