The Sovereign Development and Investment Fund (FSDI) will be active from January 2018 and will be a good mechanism for government policies, said the minister of economy Mihai Fifor. “The sovereign fund will be active as of January 1st, 2018 and will be a good mechanism for Government policies. There will be no delay (regarding the future IPOs – e.n.). (…) This is one of the most important things which the Government wants to fulfill, respectively, the Sovereign Fund. We are now awaiting the Eurostat approval and, once we have it, we will approve the law in the Government and then bring it to Parliament. Many of you, maybe want to know how it will work. We try to have as much profit as possible from the profitable companies that the state owns. We try to take that money and invest it in infrastructure. We also intend to use the money for brownfield or greenfield investments”, said Fifor, quoted by Agerpres.
The Sovereign Development and Investment Fund (FSDI) will have 27 profitable companies in the portfolio and Hidroelectrica’s listing will be decided by the new entity, announced at the end of August the representatives of the Ministry of Public Finance (MFP) in a press conference.
“The FSDI’s share capital will consist of a contribution in kind represented by state-owned shares in the companies that will be in the FSDI portfolio as well as a cash contribution. The packages of shares will be transferred to FSDI’s property and it will be able to use them as own goods. In the case of companies in which, at the date of acquisition, the State is an entire or a majority shareholder, the FSDI will not be able to alienate in any way these actions if this leads to the loss of the position of majority shareholder of the FSDI to the according companies, “it is shown in the project’s explanatory memorandum, published on August 30th, on the institution’s website.
According to the MFP representatives, the FSDI will have a cash capital of 1,85 billion lei, money from the Treasury, from privatizations. The fund will have 27 profitable companies in its portfolio, but CEC Bank and Eximbank were excluded on the grounds that “it would have been strange for a project to be in dent at the banks from the portfolio.”
Hidroelectrica will also be among the companies, and MFP officials say a future IPO will be made by FSDI. Also, if the fund considers that it has to sell shares of companies in the portfolio, it will be able to do so, but it will have to remain with at least 50 + 1% of the shares. In the GMS’s of the companies there will be representatives of the fund. The Fund will also be able to buy shares of private equity companies, but its role is to make investments in the economy.
“The draft law will have an impact on the state budget revenues starting in 2018, in the sense of reducing the revenue to the state budget with the amount of dividends received by FSDI for the shares transferred to the FSDI portfolio. This influence will be recovered in the years following the first year functioning by collecting the dividends that FSDI will pay to the state as sole shareholder, according to the decision of the General Meeting of Shareholders regarding profit sharing and dividends”, it also shown in the statement of reasons.
Thus, according to MFP representatives, the impact on the state budget is 2 billion lei per year, because the dividends will be collected by the FSDI. The fund will never be listed, and its purpose is to make a profit.
The book value of the companies in the portfolio at the level of 2015, is 45 billion lei. In September, the project will reach the Parliament.
The companies at which the FSDI will be a shareholder are Engie Romania, Electrica, Delgaz, E.ON Energie Romania, Biofarm, Chimcomplex, OMV Petrom, Telekom Romania, Antibiotice, National Company for Boiler Control, Lifting Equipment and Pressure Receptacles, Romanian Lottery, National Salt Water Company, IAR, OIL Terminal, Cupru Min, Unifarm, National Mineral Water Company, National Mineral Water Company, National Tourism Investment Company, Romgaz, Hydroelectric Power Generation Company – Hidroelectrica, National Airport Companies Bucharest, Nuclearelectrica, National Imprimeria, National Company Maritime Port Administration, Energy Participation Mangament Company, Conpet.
Funding for the FSDI will be made from earnings from dividends received from the companies holding shares in its portfolio, from those resulting from operations with its own financial instruments and from those issued by other entities, from the proceeds of the sale of portfolio shares, of the loans, including through the issuance of bonds, but also from other sources provided by the law.
MFP submitted on August 30th, for public debate, the draft law regarding the establishment of the FSDI, elaborated with representatives of the Ministry of Economy, Ministry of Energy and the Ministry of Labor and Social Justice, as well as consulting representatives of other public institutions within a working group and of an inter-ministerial commission approved for this purpose by the Government.