Monday, August 4, 2008

Romania fund to name managers

By Ruth Sullivan

Published: August 3 2008 10:51 | Last updated: August 3 2008 10:51

Fondul Proprietatea, a €4bn (£3bn, $6bn) fund set up by the Romanian government to compensate people whose assets were seized in the Communist era, is poised to appoint international fund managers to run its interests.

More than 20 asset managers have expressed interest in managing the fund, including Goldman Sachs, HSBC, Allianz Global Investors, Société Générale and East Capital.

Potential fund managers need to have experience in emerging market equities, private equity and venture capital to manage all or part of the portfolio, according to Fondul Proprietatea.

Earlier this year the fund appointed Schroders to advise on how the fund will be structured and on corporate governance.

Appointing fund managers is the next step in Fondul Proprietatea’s ambitious plans to become a flagship fund in Romania’s small asset management market. “We are hoping to attract institutional foreign investors and expect interest from pension funds and also from the domestic market,” said Daniela Lulache, chief executive and head of the fund’s board of directors.

Five per cent of the fund, which was set up in 2005, is in cash and the rest held in stakes in more than 80 Romanian companies, partly or fully owned by the state. Most (95 per cent) are energy groups with some retail groups, infrastructure companies and a titanium processor. The fund, which Ms Lulache believes to be the biggest in central and eastern Europe, is a minority shareholder in most of the companies.

Future plans include launching the fund on the Bucharest stock exchange in the first half of next year and at a later date on a foreign stock exchange as the fund seeks to attract international interest.

The Romanian government currently owns about 80 per cent of the fund with the rest held by Romanian citizens. But the government is expected to become the minority shareholder in the next few years as the number of valid claimants increases.

The fund could become a model for restitution for other countries that have suffered similar problems under a Communist regime, said Ms Lulache.

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