Only a month after the historic stake cap raise from 1% to 5% of the SIF capital, shareholders are already thinking about replacing management at these investment funds so that the new management would reflect the shareholder structure.
Whereas when the old stake cap was in place getting a seat in the board of directors was extremely difficult if not impossible for shareholders, now that the new cap is in force, things have changed.
Equity fund ING Romanian Equity, which manages 318.8 million lei (EUR73 million) in assets owns about 1% in each of the five SIFs. The fund was part of the group of shareholders, which demanded SIFs to increase dividends and pressured the SIF bosses into consulting with all the shareholders over the sale or floatation of their stakes in BCR.
The next move is to back a plan to replace SIF management.
“We don’t have the power to cause a change of management at SIFs by ourselves. Yet if such a proposal comes up among shareholders, we will back it. We will also back cumulative voting if proposed,” Adrian Tanase said. “All SIFs are considered for this and I believe the main growth driver for the SIF stocks in 2012 will be the improvement of corporate governance; the first step towards this will the replacement of the board of directors so as to reflect the shareholder structure. I believe the most important shareholders of SIFs are the local and not the foreign investors and this will become visible when boards are replaced.”
ING Investment Management manages RON1.15 billion (EUR0.26 billion) in assets, and is the third largest mutual fund manager in Romania. The two funds it manages are ING Romanian Equity and ING Romanian Bond, both of which registered in Luxembourg and investing in the region.
The equity fund invested 9.5% of its assets in the five SIFs, that is RON30 million. The manager wants to increase this exposure, considering the Erste stocks, the most valuable asset in the SIFs portfolios have seen a significant rise this year (23.5%). SIF shares are also up, as a result of higher volumes of shares that changed hands, with SIF2 gaining 25% in January.
ING Romanian Equity’s biggest investment on the Bucharest Stock Exchange is Fondul Proprietatea (9.88% of its assets). Fondul Proprietatea shares’ performance was lower than the five SIFs’, but the manager believes the fund stands chances of catching up.
Adrian Tanase says the discount at which Fondul Proprietatea is trading will go down as the state-owned companies are listed.
He is optimistic about the performance of the Bucharest Stock Exchange this year, and believes that the successful completion of state-owned companies’ stock offerings could add 10% to the main indices.
(English version by Loredana Fratila-Cristescu)