A new speculative bubble similar to the one involving Fondul Proprietatea shares is thus taking shape, but this time it is about points instead of shares.
“Three foreign private equity funds are now the main buyers of compensation points from the gray market. The points are trading at 30% to 40% of their nominal value and will be possible to use to buy land from the national real estate fund as of next year,” said Iulian Lepa, a lawyer specializing in compensations.
Classified ads are all over the Internet: “Got ANRP (the agency in charge of property restitution i.e.) points and want to sell them? Enter here.”, “Buying ANRP point compensation decisions issued under Law 165/2013. Payment on the spot. Serious sellers only.” Such ads enable various individuals to buy points they will be able to use in 2016 to participate in auctions where public land or buildings part of the national real estate fund will be sold.
This fund will be a kind of Fondul Proprietatea II, only that it will not consist of minority stakes in energy companies (such as OMV Petrom, Hidroelectrica and Romgaz) but of land, buildings and forests. ZF valued this real estate at EUR11 billion in 2013.
This real estate fund will be bigger than Fondul Proprietatea, to which the government transferred its 12 billion lei (EUR3 billion) worth of stakes in energy companies.
Therefore, the gray market of compensation points is much bigger than the gray market of Fondul Proprietatea shares. At a fund estimate of EUR11 billion and a trading price of 30% of the nominal compensation point (one point = RON1), the gray point market stands at EUR3 billion, ZF has calculated.
The same thing happened with the compensations ANRP paid with Fondul Proprietatea shares in 2005-2011. US hedge fund Elliott Associates, today’s largest Fondul Proprietatea shareholder, started buying into it in 2009-2010, before its floatation, when shares were available really cheaply (RON0.2 to RON0.3) on the gray market.
Others that bought Fondul Proprietatea shares from the gray market before its floatation were US-held private equity firm Cartesian (2.7%), as well as Swedish private equity funds managed by East Capital. Cartesian’s local representative was Nicolae Ivan, the first Fondul Proprietatea president.
The accumulation of large stakes, of 1% or even 2% in Fondul Proprietatea before its floatation in January 2011 would not have been possible were it not for the ANRP compensations. A ranking ANRP compiled shows the 30 largest compensations were awarded mainly to those who bought compensation claim rights instead of the former rightful owners whose property had been seized by the communist regime.
(English version by Loredana Fratila-Cristescu)