Romanian investment fund Fondul Proprietatea plans to resume its third share buyback offer which was suspended in January this year due to unfavorable market conditions. The fund’s manager, Franklin Templeton, has decided to increase the number of shares that the fund will repurchase in this offer.

The fund will buy back 575 million shares whereas its offer in January targeted 430 million shares. The current market value of the shares is close to EUR 100 million. However, investors expect to get a premium over the market price, so the final value of this offer may be higher.

Fondul Proprietatea recently signed a revolving credit facility of up to EUR 220 million from local bank BRD Groupe Societe Generale which it may use to finance share buybacks. Moreover, the fund also sold its minority stakes in local utilities companies E.ON Energie and E.ON Distributie to German group E.ON for an undisclosed sum, thus securing more funds for its buyback programs.

Fondul Proprietatea, which has made no new investments in recent years, has been divesting its holdings and distributing the money to its shareholders either through buybacks or through cash distributions.

The fund carried out two other public offers for its own shares, one in 2013 and one in 2014. In 2013, the fund repurchased 600 million shares at a price of RON 1, 34% higher than the market price at that time. In December 2014, the fund had a similar offer for 750 million shares at a price of RON 1.11, 19% over the market price at that time.

Fondul Proprietatea’s shares are currently trading at RON 0.763 on the Bucharest Stock Exchange and, based on the previous two transactions, investors expect the fund to offer them a price between RON 0.9 and RON 1 per share.

Franklin Templeton has submitted the public offer documents to the Financial Supervisory Authority (ASF) and will launch the offer after it gets the regulator’s approval.

“It is expected that full details of the tender offer, including pricing, will be announced if and when approval is received from the FSA, which is expected to occur within 10 business days according to the regulations in force.”

Czech brokerage firm Wood & Company Financial Services and American investment bank Goldman Sachs will manage the buyback offer.

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editor@romania-insider.com