Thursday, October 6, 2016
Romania to sell stakes in various energy, infrastructure, and transport companies
Romania said on Tuesday it will sell minority stakes in several key companies from the sectors of energy and transport infrastructure to finance investment programmes in those enterprises.
The list includes Oltenia energy holding group, Bucharest Airports, Constanta Sea Port, hydro-power producer Hidroelectrica, oil group Rompetrol and salt producer Salrom.
"Following discussions held by the Government, it was agreed that the diversification of ownership in these enterprises by capitalizing minority stakes may be beneficial for their efficiency and profitability," the government said in a memorandum published on its website.
The government's plans to dual-list a 15% stake in Hidroelectrica on the Bucharest Stock Exchange, BVB, and the London Stock Exchange have been repeatedly delayed as insolvency proceedings were taking longer than expected, despite the company's strong financial recovery. The government in Bucharest owns 80.06% of the company and Fondul Proprietatea holds the balance.
This is good news for Fondul Proprietatea. With the government selling its stakes it will force the companies to operate more efficiently. This action will also help to unlock some of the optionality that I suggested existed in the stock.
The eventual government divestment of various stakes in companies that Fondul has stakes in was one of the prime reasons that I liked this stock. By the way you can still buy this stock at a 30% discount to net asset value.