At the same time, the institution is willing to explore opportunities to support banking system consolidation potential in the country.
Over the past year, the EBRD has been actively involved in the local capital market, by participating with EUR125 million in the IPOs carried out by gas producer Romgaz in the autumn of 2013 and Electrica this summer.
The bank invested EUR50 million in an 1.9% stake in Romgaz and another EUR75 million in an 8.6% stake in Electrica. Beside participation in the two IPOs, the largest in the history of the Bucharest bourse, the EBRD is carrying out a EUR150 million program destined to banks’ issues of leu-denominated bonds.
“The EBRD is keen to support the privatization of state owned companies and the development of the local capital markets, and the opportunity to invest in Romgaz and Electrica allowed the Bank to support both objectives,” says James Hyslop, EBRD director for Romania.
His statement is a positive signal for the local capital market as the state is likely to also sell a stake in companies such as Hidroelectrica, CE Oltenia, Romtelecom.
EBRD director for romania explained that participation in Romgaz and Electrica capital allows the bank to help transform the companies from inside, with investments being doubled by a set of corporate governance principles, which would be implemented gradually.
“With Electrica, our goal was to help finance an ambitious investment strategy to upgrade the company’s infrastructure. In the near future the electricity provider will be able to offer its customers the same level of service as other – already privatised – market players,” adds Hyslop.
By far the most lasting investment the EBRD operated in a Romanian listed company is the 14.61% stake in Banca Transilvania, the third largest lender in the local banking system.
“We invested in the bank’s equity in 2001 to strengthen its capital base and allow it to expand its activities and loan portfolio. 14 years later it is one of the most important banks in Romania and we are a proud shareholder. As Banca Transilvania is focused on SME lending, this enables us to support the private sector in Romania,” states EBRD official.
Banca Transilvania has strengthened its foothold in the banking system in recent years as banks controlled by foreign financial groups have scaled back their activities. Moreover, the bank’s officials in May stated they mulled acquisition opportunities on the market.
“Romania’s banking sector could indeed benefit from consolidation. As EBRD Director for Romania, I can say that the EBRD would be willing to explore opportunities to support potential consolidation in the banking sector on a selective basis, via both debt and equity”.
During its over 20-presence in Romania, the EBRD also participated with investments in the capital of BRD. The bank exited BRD’s shareholding structure in 2011. Another major investment was the one in Petrom. Last November, the bank sold the rest of shares (1.6%) after a partial exit in November 2012.
“The EBRD exits when its role in the company is completed. With some investments we aim to provide significant advice and guidance. In other cases our objective is to provide additional comfort and confidence to other investors and catalyse other funding. While our objectives of the EBRD equity investments may vary, we exit when we think these have been achieved”.
Since the early ‘90s to the end of August 2014, the EBRD invested EUR6.8 billion in over 360 projects in Romania, being one of the largest institutional investors. The bulk of money went to the private system.
In the total current portfolio, industry, retail and agribusiness projects weigh 31%, infrastructure projects account for 28%, energy projects have a 25% weight and financial institutions a 16% one.
(English version by Catalina Apostoiu)