More than 50,000 people are queuing up for compensations and risk to be left with worthless papers if they do not get the last shares in the fund.
The Government, represented by the Finance Ministry, has a 6.17% stake left in the fund, after the stake of 351 million shares it did not contribute towards the fund’s share capital was declared as unavailable with the Central Depositary, the institution that keeps Fondul Proprietatea’s shareholder register.
Ahead of the fund’s floatation, the Government’s stake in the fund stood at 38%. However, because of the low price of the fund’s shares on the Bourse, the Government saw its stake dwindle faster than it had planned, considering compensations are no longer awarded at the face value of 1 leu, but at the market price of the shares. Judging from the pace at which compensations were transferred in the past months, people close to the fund expect the 6% stake that is left to be used up by late October.
“The Government does not have the courage to make a decision at this moment and officially announce a compensation cap, or say it will raise the fund’s capital. Any move the Government will make in terms of compensations will have a strong electoral stake behind, so that I expect Government officials to make only some statements announcing they’re analyzing the situation,” said Iulian Lepa, a lawyer specialized in compensations.
Ovidiu Fer, an analyst with Wood & Co. Czech brokerage, also expects the Government to exit the fund’s shareholder structure “without too much ado” by late October.
The exhaustion of the shares part of the 6% stake of the Government will also have an impact on the convening of the general meeting of shareholders to modify Fondul Proprietatea’s articles of incorporation and to vote on the secondary floatation on Warsaw. The Franklin Templeton manager has not convened this meeting yet, but the later it does, the lesser say the Romanian Government will have in its outcome.
The second largest institutional investor in the fund is UK’s City of London Investment Management company, which owns 5.85%.
(English version by Catalina Apostoiu; Editing by Loredana Fratila-Cristescu)