Minister Grigorescu, distinguished guests, ladies and gentlemen. It is a great pleasure to be with you today as we celebrate the fifth anniversary of the listing of Fondul Proprietatea on the Bucharest Stock Exchange. Greg, members of Fondul’s board, thank you for inviting me to mark this occasion with you.
Fondul’s listing on the Bucharest Stock Exchange and secondary listing on the London Stock Exchange highlighted Romania’s potential as an investment destination. Before these listings, Fondul shares were undervalued, trading on the grey market at a discount upwards of ninety percent of their nominal value. This meant that restitution recipients only received about ten bani for each leu of value in Fondul stock. Institutional investors were effectively barred from investing in Fondul, which further dampened foreign and domestic investors’ appetite to invest in Romania’s nascent capital market.
Currently, Fondul’s stock trades at 70 bani per share, seven times greater than before the listing. Additionally, Fondul has distributed over two billion lei (or about half a billion US Dollars) to restitution recipients, about 20 times more than they received from 2006 to 2009. Total distributions to shareholders, both foreign and Romanian, exceed $1.5 billion. With the Bucharest Stock Exchange listing, institutional investors, who had been sitting on the sidelines, could seize the opportunity to purchase Fondul shares and invest in Romania. And, those investors have done just that – today, Romanian and foreign institutional investors account for 13 and 24 percent, respectively, of Fondul’s shareholders.
The effects of Fondul’s listing and Franklin Templeton’s management of Fondul extend to the Romanian capital market and the Romanian economy as a whole. Under Franklin Templeton’s management, Fondul has attracted significant interest from international investors, promoting Romania and the Romanian capital market. Franklin Templeton actively engaged successive Romanian governments and promoted initial public offerings. Fondul also used the Bucharest Stock Exchange for placement of Fondul holdings totaling €445 million, greatly increasing the exchange’s liquidity. The secondary listing on the London Stock Exchange also increased the visibility of Romania and Fondul’s portfolio companies.
Fondul’s listings also had positive effect on the Romanian economy as a whole. By attracting foreign portfolio investments totaling €1.2 billion, Fondul drew much needed liquidity into the Romanian economy. In Fondul’s role as minority shareholder, and together with Franklin Templeton, their promotion of sound corporate governance in the state-controlled enterprises helped improve these companies’ profitability. The figures speak for themselves: the net profit of Fondul’s top 20 holdings increased by eighty percent from 2010 to 2014 – to the benefit of the companies, their shareholders and the Romanian economy.
Having looked at Fondul’s quite brilliant past, let’s ask – what does the future hold for Romania? I see the potential for a strong, wealthy Romania. But to create sustained economic growth requires a strategic vision; thorough administrative reform to build a professional, non-political, skilled and clean public service; sound, stable and transparent decision-making; and long-term planning and investment.
Deep, liquid capital markets in Romania would also provide a strong platform for growth. The depth and maturity of Romania’s capital markets, as the experience of other emerging markets has shown, would be accelerated if more of the state owned enterprise sector were managed by professionals and brought into the market. Fondul Proprietatea and Franklin Templeton could play a critical role in this transition to a deeper, more mature capital markets and a sustained, high growth Romania.
Fondul Proprietatea and Franklin Templeton have been steadfast partners with Romania since 2010, working with each of the many governments since then to build Romania’s prosperity. On this fifth anniversary of Fondul’s listing on the Bucharest Stock Exchange, I applaud Fondul and its manager, Franklin Templeton, for their outstanding work, and for their contributions in building the foundation for Romania’s future prosperity.
Thank you for your patience and attention.