Saturday, December 20, 2008

Romanian tycoon to acquire Fabian, eyes new buys

LONDON, Dec 19 (Reuters) - The family wealth fund of Romanian tycoon Dan "Dinu" Patriciu has offered to acquire Fabian Romania, and said it will make further buys in the eastern European country through the property firm. Black Sea Global Properties, a unit of Patriciu's Rompetrol Holding (RPH), announced on Friday a 1 euro per share cash offer for London-listed Fabian, valuing the Romanian property fund at 50.8 million euros ($71 million). "Real estate is an area that we would like to grow in. Dinu started out in real estate and this is what he's familiar with," Obie Moore, chief executive of RPH and a director of Black Sea told Reuters in an interview following the announcement. "This is quite different from investing in hedge funds, as we've found out in the last several months.

The opportunity in Romania is compelling given its growing economy and high demand for real estate," said Moore. At 1627 GMT, shares of Fabian were up 78.7 percent to 0.9 euros, from a closing price of 0.52 euro on Thursday. Patriciu, a politician and former architect, was ranked No. 462 on Forbes magazine's rich-list in March 2008, with an estimated net worth of $2.5 billion. The 57-year-old billionaire sold his stake in Rompetrol SA, the Romania-based oil firm he founded, to the Kazakhstan government in 2007 for an undisclosed sum. Rompetrol SA was valued at $3.6 billion by its auditors at the time.

The Fabian acquisition comes as much of Europe's property markets are hammered by the ongoing credit crisis, raising concerns of failures among real estate firms. In Romania, a newly elected government has exacerbated the political and economic uncertainties, while ratings firms Fitch and Standards & Poors have cut Romania's credit rating to "junk", citing the risks of a severe financial and economic crisis. Fabian, which owns offices and apartments in Romanian capital Bucharest, marked down the value of its office portfolio by 2.6 percent, or 1.8 million euros, as of end-Sept. 2008, to account for falling capital values.

"The real estate boom in Romania was driven by the very active lending of commercial banks, which were funding up to 80 percent of project values. But that has changed dramatically right now," said Moore. He said values in Romania are likely to fall further next year, but expects more deals involving cash-rich private equity players like RPH, which are in the market to pick up bargains. Moore said RPH plans to keep Fabian listed in London and intends to inject more cash in the firm to fund new acquisitions in Romania. "Commercial assets are our first priority. We would like to focus on good locations in Bucharest, and really follow what Fabian has already done and do more of it," Moore said. "There's a good bit of residential properties coming on to the Romanian market right now so we are bit more cautious about that segment," he said. ($1=.7164 Euro) (Reporting by Daryl Loo; editing by Simon Jessop)

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