The fund repurchased 66.7 million of its own shares (0.5% of its capital) from the bourse between May 11 and June 6. The operations were carried out weekly and are part of the program by which the fund can buy back as much as 10% of its own capital from the bourse to support the share price, which is currently way below the net asset value (NAV) per share.
The fund issued 13.778 billion shares with a face value of 1 leu (EUR0.24) and the cancellation of repurchased shares will cut capital to 13.712 billion shares.
The stock cancellation will boost the NAV, while the fund’s market value will go down.
Franklin Templeton gets an annual fee of 0.479% of Fondul Proprietatea market value to manage the fund. This raises the question to what extent the stock repurchased from now on will be cancelled, given that the move will eat into the manager’s fee.
The fund has around RON120 million at hand to repurchase its own shares. The impact of repurchases was felt in the share price, which has risen over recent weeks. However, the increase has also been supported by the announcement about the state’s stake dropping below the 33% threshold.