Fondul Proprietatea is one of the largest closed end funds in the world. The largest investor in the fund is actvist investor Paul Singer.
Franklin Templeton Investment Management Ltd. United Kingdom Bucharest Branch, in its capacity as Investment Manager of Fondul Proprietatea SA (“the Fund”), announced yesterday that it has sold the entire participations of the Fund in E.ON Distributie Romania S.A. and E.ON Energie Romania S.A.
The stakes in total represented 5.3% of Fondul´s NAV. The shares of the Eon companies were not listed.
Details of the transaction were not disclosed.
For more details on the Fondul opportunity see:
FONDUL PROPRIETATEA WELCOMES HIDROELECTRICA’S INSOVENCY EXIT AND CALLS FOR ITS SWIFT IPO
Bucharest, 21 June 2016 – Franklin Templeton Investment Management Limited United Kingdom Bucharest Branch, in its capacity as Investment Manager of Fondul Proprietatea SA (“the Fund”), welcomes the closure of the insolvency proceedings of Hidroelectrica following the syndic judge’s decision on 21 June. After a long period in insolvency, Hidroelectrica emerges as a healthier and stronger company, prepared to capitalize on its enormous potential and to list on the stock exchange.
“We would like to congratulate the judicial administrator Remus Borza for Hidroelectrica’s outstanding results over the past four years and for his dedication, commitment and contribution to the restructuring of Hidroelectrica. From a loss-making company Hidroelectrica became a highly profitable, efficient and competitive one. The judicial administrator made remarkable efforts over the past four years and, despite the numerous challenges, managed to increase Hidroelectrica’s revenues and reduce operational costs, which allowed the company to return on a positive cash flow and subsequently exit insolvency” commented Grzegorz Konieczny, Portfolio Manager of Fondul Proprietatea.
He added: “We are concerned to see that even though the company’s exit from insolvency had been expected since last year, Hidroelectrica still does not have an independent Supervisory Board selected and appointed in accordance with Ordinance 109/2011. This might pose significant risks for the company in the near future. We urge the Ministry of Energy to accelerate the appointment process of the new Supervisory Board that should follow up with an appointment of professional executive management team. Especially now, after the insolvency exit, Hidroelectrica needs strong and determined management in order to protect the value that has been created during the process, to create further value for Hidroelectrica’s current and future shareholders as the next important milestone is to successfully list the company in Bucharest and London.”
The closure of the insolvency proceedings opens the way towards Hidroelectrica’s initial public offering, the first listing of a Romanian state owned company in more than two years and the largest listing in the history of the local capital market. Fondul Proprietatea is a strong supporter of the company’s IPO, which represents a great leap towards the upgrade of the local stock exchange to the emerging market status.
Fondul Proprietatea advocates for Hidroelectrica’s dual listing on both the Bucharest Stock Exchange and the London Stock Exchange, which would benefit the Romanian capital market, as well as ensure access to a larger pool of demand at the time of the IPO and afterwards, as well as greater visibility for the company. In order to contribute to a successful dual listing, Fondul Proprietatea has proposed to sell during the IPO a 5% stake out of its 20% holding in Hidroelectrica, and also a 3.74% stake representing the subscription rights the Fund has in the share capital increase process, besides the 15% stake the state intends to list.
- Dividend yield of 8%
- 2017 PE of 12.4
- No debt, positive cash balance of 100 mln E
- ROE of 15%
- EV/EBITDA of 7
- Not in the price: further significant potential from VLT – the investment was made, OPAP waiting for the licence. Plan B – OPAP already lunched BIT arbitration against Greece
From Morgan Stanley:
A new chief gambling regulator in Greece raises the prospect of OPAP finally launching VLTs. These are not included in our forecasts or valuation, and we see it as a free option worth €1.8-4 per share
Greece will appoint a new president of the Hellenic Gaming Commission, who will replace Mr Stergiotis, whose term ends on June 19.
A new chief regulator raises the prospect of launching VLTs. OPAP and the regulator have been in a stand-off, with OPAP stating that regulatory restrictions made the project not economically viable. We expect that resolving this stand-off could well be one of the key issues to be addressed by the new regulator. Tax revenues from VLTs formed part of last July’s third memorandum with the European Stability Mechanism to secure additional funding, suggesting that launching will be important for State financing.
We estimate that the VLT project could be worth €1.8 to €4 per share. We do not include VLTs in our forecasts or valuation, and see this as a free option, as we outlined in this note. If launched with commercially acceptable terms, we expect that VLTs could generate c.€170m of EBITDA and €0.21 of EPS at maturity in 2010. OPAP paid €560m for the licence, equivalent to €1.8 per share, and our bull case values VLTs at 7.4x EV/EBITDA, broadly in-line with international comparables and transactions.
€12 per share bull case becoming more realistic? Our bull case assumes VLTs ramp up in 2017, reaching maturity at €172m of EBITDA in 2020. We assume modest cannibalisation, with Retail EBITDA dropping from €315m in 2016e to €279m in 2019e. Our bull case values the shares at a P/E of 16x in 2018e, at the higher end of their historical range, reflecting the strong cash generation, recovery potential in Greece, and strong growth driven by VLTs. We estimate that the company could return nearly €6 per share to shareholders in the next 4 years in our bull case.
Higher duties and a weaker macro environment would make us more cautious. We see VLTs as a free option, as these are not included in our forecasts or valuation. The main downside risks are that duties increase beyond the planned 35% rate, or that the bond yield moves upwards again
I am buying Unicredit. Below is an outline of Morgan Stanley report that nicely
summarises the case.
1st Take: CEO Resigns
Unicredit’s CEO steps down after an extraordinary board meeting as “the conditions are now such that it is time for a change at the top of the group”. Mr Ghizzoni agreed to stay in office until his successor is found.
We forecast a CET 11.4% by 2016e vs the 10.75% SREP/G-SIB. The retained earnings, progress in non-core RWA reduction and possible disposals could avoid a capital raise in our view, and hence why we remain Overweight the stock.
Recent unconfirmed press reports (Reuters, May 20) suggest UCG may be reviewing the disposal of up to 15% of Fineco and a stake in its Polish business Pekao among other measures to replenish capital in the short term. Press reports (Reuters 24/05/2016 link) also suggest the JV between Pioneer and Santander may not go ahead, although given the contribution to capital (+25bp) and the approval of the board on the deal, it’s difficult to see it stopped, in our view. UniCredit and Santander declined to comment. We believe the final step around strategy to rebuild capital, including a capital raise or not, will remain uncertain until the new management team is in place.
Delivery on already announced cost targets is key to lift profitability medium term, in our view. Unicredit already booked €760m restructuring charges in FY15 and 1Q16 including provisions for early retirements (6.1k departures planned throughout 2018) and Ukraine. Costs should start to come down from 2017e, and together with lower provisions drive a recovery in ROTE to 7.6% on our numbers 2018E.
At 0.4x P/TBV capital build is key to drive re-rating. UCG is now trading on 2.1x P/PPOP, which is close to historical lows; however, we believe capital rebuild, non-core rundown and execution on restructuring are key levers to restore confidence
Excellent LEX article from FT. Simple common sence reasoning why to buy into Barclays restructuring. We are long Barclays.
April 27, 2016 12:55 pm
It is plain to see why chief executive Jes Staley wants to turn Barclays into a transatlantic bank targeting the US and UK. Return on tangible equity for the group was a measly 3.8 per cent in the first three months. Strip out a medley of European and Asian businesses plus the South Africa bank, and the return on its “core” operations rises to a respectable 10 per cent.
A 17 per cent year-on-year decline in Barclays’ UK profits, driven by lower mortgage margins, augurs tougher times ahead. Its shares have underperformed the MSCI UK bank index this year and trade at a tangible book value of just 0.6 times, compared to restructuring play RBS on 0.7. Barclays’ shares rose 2 per cent yesterday. This is not yet a recovery but a welcome sign of ordinariness.
Damadoran is the biggest guru in Corporate finance. Watch the video from about 14 minute. He talks on valuation, Tesla and Valeant. Well spent 8 miuntes.