After having made tens of millions of euros from real estate investments, Gheorghe Iaciu, who also owns the Doraly shopping center in Afumati, near Bucharest, has become one of the most influential investors on the capital market.
He took over 5% in regional investment fund SIF Muntenia (SIF4.RO) and last year attempted to replace its management with the help of a group of brokers and private equity funds.
He got a new board of shareholder representatives elected after a 33-hour general meeting of shareholders, but was forced to take a step back and agree to a joint board after the management company of the SIF, SAI Muntenia Invest, went to court challenging the July 2012 decisions of the shareholder meeting.
Iaciu embarked upon a new project on the capital market this year, buying a significant stake in real estate developer Impact Developer & Contractor, which he wants to turn into the largest apartment building developer.
Impact was one of the largest developers on the residential market before the crisis but is now struggling to survive amid 137 million lei (EUR31 million) losses accumulated the last three years and many lawsuits.
Iaciu is the main shareholder of the company, with 32.7%, after buying the stake of the founder, Dan Ioan Popp, in a forced sale by Banca Transilvania (TLV.RO) and other shares from ING’s pension funds and Franklin Templeton’s investment funds. He says he does not want to go beyond 33% in Impact, which would require him to conduct a tender offer.
“I don’t want a tender offer, I want Impact to stay public. I feel at home in real estate and I want to develop this company,” Gheorghe Iaciu said.
His first move after getting control was to replace the board of directors and management.
“Impact had a disastrous management in the past. Its core business in the last few years has been lawsuits, so we now have more than 180 lawsuits pending and a very large legal department, larger than the sales department. I want Impact to return to its core business of building homes.”
The most dangerous of all lawsuits by far was the one involving Romconstruct, which could have bankrupted Impact. The new management settled out of court with Romconstruct, which used to build the residential complexes developed by Impact and had been battling it in court over RON48 million for five years. The legal war of the two rendered Romconstruct insolvent and caused Impact huge losses over the last few years. Impact posted RON74.9 million loss in 2012 alone.
Iaciu did not say how much Impact paid to settle.
“I want the company to make profit next year. Until we get there, this year we’ll reassess our assets, clean up the balance sheet (…). Second, we plan to raise cash from shareholders by a capital increase to start building homes.”
To turn Impact around, Iaciu is working together with Adrian Andrici, another important stock market investor, who owns 13% in the company. Another big investor in Impact is Salink Limited (10%), a company owned by Swedish-held East Capital.
Impact’s most valuable asset is the 34-hectare plot of the Greenfield residential complex in Baneasa (northern Bucharest), where Impact built about 750 apartments and there is room for 4,000 more.
“I want to develop 500,000 square meters of apartments in Greenfield over the next ten years,” Iaciu said.
The businessman will shift focus to Bucharest and Impact’s assets in other parts of the country will be sold to pay off the debt to banks and secure cash for future investments. Impact has EUR14 million to repay to Piraeus and the National Bank of Greece.
(English version by Loredana Fratila-Cristescu)