Tuesday, January 25, 2011

Romanian property fund to lift bourse liquidity

BUCHAREST, Jan 25 (Reuters) - Shares in Romania's Fondul Proprietatea, designed to repay property owners dispossessed by the communist regime, rose on their market debut and analysts expect the listing to attract foreign investors to the country's nascent capital markets.

The 3.6 billion euro ($4.92 billion) fund -- managed by Mark Mobius's Franklin Templeton Investment Management -- has the potential to boost liquidity on Bucharest's BET exchange and lure foreign investors, analysts say, as it offers them an easy way to invest in the country's energy sector, where it holds stakes in unlisted companies, such as Romgaz.

"The Fondul portfolio has the potential to attract funds from foreign investors who would then be able to invest in companies on the local market, which would close a gap in performance between the local bourse and those of the region," said Ioan Burzo, analyst at Romania's BT Asset Management.

Romania, which depends on a 20 billion euro International Monetary Fund-led bailout, needs more foreign investment to pull out of a deep recession and catch up with the rest of the European Union, of which it is the second poorest member.

Fondul shares were trading at 0.63 lei ($0.202) by 0813 GMT, compared with about 0.50 on the over-the-counter market in recent days, according to local news agency SeeNews.

Its traded volume vastly outweighed that of the BET, which includes Romania's top 10 traded public companies.

The closed-end fund was created to compensate citizens whose property was confiscated during communism and it holds shares in more than 80 state-owned and former state companies, mainly in the energy sector. It also holds shares in Petrom (SNPP.BX: Quote) (OMVV.VI:Quote), Transgaz (TGNM.BX: Quote) and Transelectrica (TSEL.BX:Quote), all of which Fondul's manager Franklin Templeton expects the government to sell shares in over the next couple of years. [ID:nLDE70J178]

The state controls 39 percent of Fondul and Franklin Templeton expects that stake to fall below 33 percent later this year. A further 42 percent belongs to individuals. (Reporting by Sam Cage and Marius Zaharia; Editing by Louise Heavens) ($1=.7323 Euro) ($1=3.124 Lei)

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