Distribution companies disposals should drive the Fondul Proprietatea NAV

Petrom, Romania’s largest oil company that received shareholder approval for a secondary listing in London on Sept. 22, has its shares currently trading at a three-year low as the price “has been hit more than it should,” Konieczny said in an interview in Bucharest on Wednesday.

“I don’t think it makes sense at the current valuation levels of Petrom, at
least from my perspective, to think about selling shares,” Konieczny said.

Fondul Proprietatea, which was set up to compensate citizens for property confiscated during Communism and holds shares in Romania’s biggest companies, has been trying to secure liquidity by selling some of its assets to fund share buy-back programs aimed at boosting is share price.

The fund’s shares fell 0.3 percent to 0.787 lei at 5 p.m. in Bucharest, while Petrom shares rose 0.2 percent to 0.33 lei, after trading at the lowest level since Jan. 2012, according to data compiled by Bloomberg.

Fondul Proprietatea plans to lower its Petrom holding below 15 percent from the current 19 percent but it will be “mindful of where the market is,” Konieczny said.

The fund is also ready to resume talks with Electrica SA on selling its minority stakes in power distributors’ units afterfailing to reach an accord on a deal in April because of the price, he said.

Shareholder Interest

“It looks like the minority shareholders of Electrica are interested in
this transaction, we are too, but I think the discussion can really start when both
parties are ready to enter these negotiations,” Konieczny said.

With no initial public offerings conducted on the local capital market this year, Fondul is considering urging the government to askENEL SpA andE.ON SE to agree on listing the shares of their local units, in which both the state and the fund are minority shareholders, according to Konieczny.

“It’s also in the interest of the government to have a firm market price for
these holdings,” he said. If ENEL and E.ON “receive a request from the government and based on the privatization agreement, they cannot say no.”

Romania failed to deliver on pledges to sell at least three companies on the stock exchange this year, which was part of an agreement with the International Monetary Fund and the European Union, because of legal issues or accumulating losses. That agreement expired last month and the government plans to ask for a new deal by the end of this year. The delays are harming the Fund’s plans, Konieczny said.

“It’s a big issue,” Konieczny said. “For us it’s a problem because if the local capital market doesn’t grow, the fund will have to get smaller and smaller.”

The fund is also pushing for the listing of Salrom, a salt producer, in which it has a 49 percent stake, with the state holding the rest of 51 percent, according to Konieczny. A new shareholders meeting will take place in about 30 days to vote on the listing, he said, adding that he hopes the Economy Ministry will agree with the plan after receiving “some new information.”