Fears that the privatization program through listing of minority stakes in state-owned companies cannot be covered through internal demand are exaggerated.
ZF estimates show that EUR1.2 billion can be raised from individuals, pension funds and Romanian investment funds. The total value of the four privatization offerings is around EUR1 billion, with the largest offering being the one to sell 15% in Romgaz, estimated at EUR600 million.
“A campaign to increase awareness of the bourse nationwide, alongside the offerings themselves, would be of real help for these offerings,” says Ovidiu Dumitrescu, deputy general manager of brokerage Tradeville.
Government officials in charge of privatizations recently said they were taking into account also listing Romgaz on the London stock exchange because in Romania there would not be enough demand.
The state could raise EUR300 million from individuals alone if privatizations are well promoted. More specifically, Romanians have savings of EUR30 billion in bank deposits, and if at least 1% of these savings were invested in shares of the companies that the state is putting up for sale within the next year, this would mean firm demand of EUR300 million.
The allocation of 1% is hypothetical and significantly lower than on western financial markets, where over 20% of individuals’ savings are invested in shares of stock-exchange listed companies.
In Poland for instance, over one million citizens have bourse accounts and in 2004, when the country’s largest bank PKO was privatized, thousands of Polish queued to buy shares. In Romania a few tens of thousands of Romanians have stock exchange investment accounts.
“If foreign investors don’t see strong domestic demand for the companies put up for sale, they are less interested in taking part,” says analyst Mihai Caruntu.
(English version by Daniela Stoican)