Fondul Proprietatea announced the publication of a prospectus in connection with its proposed application for admission to trading on the Specialist Fund Market of the London Stock Exchange plc of Global Depositary Receipts (the “GDRs”) representing interests in its shares, states a release received by energynomics.ro.
“It is expected that admission will take place on 29 April 2015”, the release adds.
Previously, the Fund`s manager, Greg Konieczny, told energynomics.ro that the London listing of Fondul Proprietatea (The Romanian Property restitution Fund) will take place in April or May and that there was a setback over the nature of the listing instruments, and most likely will be used global depository rights (GDR) in the absence of an agreement from the Financial Supervisory Authority (ASF) for the use of the much cheaper DIs (Depository Interests).
“We intend to list it through GDR, in April or May, that if we do not get to use DI after an eventual ASF agreement, in which case we will return to these tools, which we believe are an instrument much more beneficial for the local market, too,” said Konieczny for energynomics.ro.
The quarrel over the SPO
Capital market sources told energynomics.ro that the FP listing may affect its liquidity, therefore hindering the Bucharest Stock Exchange efforts to climb Romanian market from “frontier” to “emerging” status by cutting into the local liquidity and thus, affecting the quantitative criteria demanded by international institutions.
However, some analysts are optimistic about the situation, saying that FP will have no problems in maintaining the daily liquidity at the Bucharest Stock Exchange of 2.5 – 3 million Euro, after the announced listing on the London Stock Exchange.
“For FP shares after listing on the London market liquidity in Bucharest should be at least as far as in the present. To maintain a daily average of 2.5-3 million Euro in the local market does not seem a very difficult task for the Fund, “ says Cristina Boicu, Head of Equity Sales Raiffeisen Bank Romania, who considers that turnovers of the Bucharest Stock Exchange should not suffer because of this event, in an interview for Bursa.
“The first reason for this is that investors will want to trade on the main market, where they are specialists who know the best trading details of that issuer, because they maintain contact with both local investors and with the international ones and I know the behavior of their actions regarding Romanian shares. In addition, a third of the shareholders are Romanian residents (individuals and institutional investors), and for them the first option will be the local market,“ said Boicu.
“With the FP listing on the London market, the first aspect that we will observe is the slight increase in demand for these titles, as they will be available to other players that are not present in our market. From the Romgaz and Electrica experience, most of the liquidities, 60-80% of these, are in the main market, in Romania to be exact,” said the Raiffeisen expert.
The difference between DIs and GDRs
DIs require a simpler procedure without requiring the submission of a prospectus, are cheaper than GDRs and it’s important to note that many closed-end funds are traded in London by DI’s. The Listing of the Property Fund through DIs would provide significant benefits
The Listing of the Property Fund through DIs would provide significant benefits not only the Fund, but also the entire market in Romania, for several solid reasons: it attracts a large number of new foreign investors that are currently active in Romania; brokers would increase coverage from analysis reports, which will promote Romania among international clients, which in turn will gain a better understanding of unlisted companies in the portfolio, especially before their IPOs.
Once listed, the PF will be the third largest fund after the NAV and market capitalization of the 422 funds listed on the LSE, increasing visibility and Romania Fund internationally.
“DI sites would allow existing shares to be traded efficiently and easily on the London Stock Exchange and without requiring a separate tool to be listed in London. If GDRs are used, investors have to pay a conversion fee to the custodian bank issuing the GDRs (every conversion). GDRs listing would require a separate instrument and would require a prospectus for their issue,” said Konieczny, quoted by econtext.ro.
