SIMILAR ARTICLES

How much of public investment represent European cohesion funds: a situation at EU level with Romania in the list

One of the major struggles regarding the next EU Multiannual Financial Framework refers to the level of cohesion funds to be allocated to member countries… Mai mult

Romania’s debt costs: Yield of government bonds compared to countries in the region

The yield of long-term Romanian government bonds was 4.28% in January 2020, according to Eurostat data. That is well above all the other states of… Mai mult

Reversed trend in mutual funds: Romanians invested more money than they withdrew. They look for funds with government bonds

Net subscriptions in Romanian mutual funds (the difference between invested and withdrawn amounts) became again positive in 2019 after they had been negative in 2018.… Mai mult

Romgaz has started exploitation of richest onshore gas deposits discovered in 30 years

Romgaz (SNG) announced the start of production in the deep area of Caragele deposit (Buzau), the biggest discovered in the last 30 years and one… Mai mult

4.9% – Romania’s spectacular public deficit in Q3. 2 times more than anyone else in the EU

Romania managed again to stand out at the EU level by recording the highest level of the public deficit in the third quarter of 2019,… Mai mult

Cronicile

Sovereign Investment Fund might postpone Romania’s transition from frontier market to emerging market status

de Adrian N Ionescu 14.8.2017

The draft law on the establishment of the Sovereign Development and Investment Fund (FSDI) provides for its exemption from the application of the laws on accelerating privatization, which also included the method of listing on the Bucharest Stock Exchange (BSE) of companies such as Hidroelectrica, Aeroporturi Bucuresti, Maritime Ports Administration and others.

Meanwhile, these companies have been included in the portfolio project of FSDI, the colossus through which the state will manage the 27 stakes it could hold in as many companies, according to an officially unconfirmed portfolio project.

FSDI transferring shares or other assets from its ownership or owned by the companies in which the FSDI holds capital is not subject to the provisions of Government Emergency Ordinance 88/1997 on the privatization of companies, as subsequently amended and supplemented, neither to the provisions of the Law 137/2002 on some measures for accelerating privatization, as subsequently amended and supplemented“- says the draft law on the establishment of FSDI, Article 7.

Neither the draft law on the FSDI’s establishment nor the articles of association mention anything about the stock exchange.

And giving up the listing of Hidroelectrica would block one of the steps that Romania hopes to make, year after year, to attract massive investments: it would delay indefinitely the promotion of the Romanian capital market from the frontier market to the emerging market status. (details of the transition to emerging market status – with the related benefits – here-link). Both the BSE and the investors bet on the contribution that the company’s presence in the stock market would have in meeting a key promotion criterion: market liquidity.

Hidroelectrica

Hidroelectrica is to be listed, though, according to recent statements by Minister Toma Petcu, made in the midst of a change of leadership disputed by the company’s second largest shareholder, Fondul Proprietatea.

“We will adopt as soon as possible a government decision amending one thing: the percentage to be listed. We will not change the method, only the percentage to be listed will be changed, in the sense that from 15%, the percentage that the Romanian state intends to list, we only want 10%, to see how it works on the market, how Hidroelectrica behaves as a listed company and have the possibility at some point chosen by the state to list the remaining 5%, to maximize the money obtained from this listing,” said Toma Petcu.

The money from the listing will go to the company and “we are interested to see whether we can develop new capabilities,” added the Energy Minister, who expects the conclusions of the listing consortium to start the IPO.

Stake

The importance of promoting in the category of emerging markets (from the current frontier market status) is for Romania to come to the attention of large global investment funds, which will increase the demand for the shares of listed companies in Bucharest and, respectively, their market value.

This way, Romanian companies would have access to higher funding at lower costs.

Lucian Anghel, President of BSE

Obtaining the emergent market status is a strategic objective for BSE, given that the global market “is an intense competition for funds. When Romania is upgraded, we will have access to 20-25 times larger funds,” said Lucian Anghel, President of the BSE Board of Directors, in February for Cursdeguvernare.ro.

“Romania will have the chance to get the emerging market status in 2020, as it meets the qualitative criteria, but needs the increase in liquidity and the listing of Hidroelectrica“, according to Lucian Anghel. The BSE official did not wish to comment on the draft law on FSDI.

Romanian companies would get access to billions of euros they need for capitalization, money that avoids now the Romanian market because it does not have the emerging market status.

At present, the BSE (and Romania implicitly) is classified as a frontier market, especially because of the low liquidity and the absence of at least another large share issuer. The FTSE Russell classification agency says the Romanian stock market meets eight of the nine FTSE Russell criteria to move to the emerging market category, the ninth being one of the most important, the market liquidity.

“The listing of Hidroelectrica would greatly help the market to meet that free float criterion,” (shares that can be publicly traded) said Jim Stewart, Vice President of Raiffeisen Bank, also in February, at a conference on the development of the Romanian market.

In his turn, the BNR Chief Economist, Valentin Lazea, said that “the listings of private companies on the capital market are not able to provide the liquidity needed for promoting to the emerging market status. State-owned companies are needed.”

FTSE Russell has included BSE on the watchlist for promotion, but the world’s largest investors are particularly looking at the ratings issued by MSCI, which has harsher criteria.

Recent listings of MedLife and Digi have not brought the necessary progress.

It needs for the stock market to list at least three companies with a market capitalization of USD 1.26 billion and a free float of USD 630 million, and also have a suitable average daily trading turnover to ensure investors’ withdrawal in just a few days.

“An untold truth is that we have minimum criteria that the listed companies have to meet, to count: almost USD1.3 billion – the size of the company. The most difficult criterion for us is the free-float size, which should be over USD600 million, namely USD 630 million. These are the minimum criteria. The key word in the assessment is the <<comfortable over-implementation>> of the minimum criteria, just like the nominal and real convergence criteria for joining the Eurozone. Informally, this “comfortable” would mean exceeding the minimum criteria by at least 20%. That is what the upgrade would mean informally. We cannot find that anywhere,” said the BSE President in February, referring to the need for Hidroelectrica to be listed.

Mergeți în homepage ›

Publicat la data de 14.8.2017

Lăsați un comentariu


NEWS

Shareholders of Galati steel plant promise investments of one billion euros

GFG Alliance has committed to invest one billion euros to upgrade Galati steel plant in order to reduce emissions and increase production. Another EUR 1… Mai mult

Transport Ministry announces it has sent to Brussels the financing request for Sibiu - Pitesti highway

The Transport Ministry, as the Intermediate Body in Transport, approved the financing request for the project "Construction of Sibiu - Pitesti highway", Sections 1, 4… Mai mult

Romania and Juncker Plan: EUR 720 million attracted, of which 35% by Transgaz for BRUA

(The map of investment financed through Juncker Plan, by GDP share. Darker colours mean higher shares) The operator of national natural gas pipelines, Transgaz (TGN)… Mai mult

Top 3 reasons why young people leave Romania

Lack of trust in authorities, corruption and low living standards are the main reasons why young people leave Romania. The data is part of a… Mai mult

IMM Invest Romania – program implementing rules have been published

The Ministry of Public Finance announces that it has issued the methodological norms for the implementation of the Program for supporting small and medium-sized enterprises… Mai mult

Pollution import and car park expansion: comparisons with the other EU states

Romania is the EU country with the fewest cars in terms of the number of inhabitants, according to data recently published by Eurostat. We appear… Mai mult

Government is trying to save budget deficit: reductions in public administration system, cancellation of bonus for harmful conditions, excise duty on soft drinks

The Government is preparing the public for the first measures aimed at avoiding the budget slippage, which would be applied by the PSD-ALDE government. News… Mai mult

Laura Codruta Kovesi remains alone in the race for European Chief Prosecutor

French Prosecutor Jean-Francois Bohnert will be appointed as head of the European Financial Prosecutor's Office, a position for which he was heard on Thursday, 11… Mai mult

Romania - EU country with highest risk of dying in a road accident, Bulgaria is quickly decreasing number of victims since it built motorways

Romania recorded the highest road deaths in the EU also last year, with 96 deaths per one million inhabitants in 2018, almost double the EU… Mai mult

Latest developments in progress at Health Ministry: Differentiated wages based on performance, competitions organised at a regional level not by hospitals

Sorina Pintea announced on Thursday further new changes that will be brought to the functioning of the health care system, including new rules for employment… Mai mult

ANAF changes selection procedure for liquidators. Main changes

The new order on approval and selection procedures for insolvency practitioners is an important step to a very good direction, industry experts say. ANAF is… Mai mult

Romania loses competition for a seat at UN Security Council. MAE Excuse: Campaign started too late

Romania lost to Estonia in the final vote to get the non-permanent member position within the UN Security Council for the period 2020-2021. On Friday,… Mai mult

Business internationalization / eMAG makes a step to entry five new international markets and targets a business of EUR 2 billion

eMAG hopes to get the opinion of the Hungarian Competition Council over the next two months for the acquisition of Extreme Digital, the market leader… Mai mult