Swisscapital on Fondul offer

The sixth buyback programme kicked off on the 9th of September. FP aims at repurchasing 891,770,055 shares (and the equivalent GDRs representing) 7.97% of the outstanding shares. The Fund may not hold more than 10% of its own shares and currently own 227,572,250 titles (2.03% stake) acquired in the context of the fifth programme, completed in late July. The launch of the sixth round became possible after FSA approved in August the cancellation of 990,855,616 shares bought back during the fourth acquisition programme. The maximum unfolding period of this buy-back expires on 15 November 2016.

  • FP is confident in raising sufficient cash to finance the programme mainly through holdings disposal, as it declared that leveraging is not seen as a long-term plan. In August, FP reported available funds of RON 839m, out of which RON 450m represented the short-term credit facility from Citibank that will expire at the end of 2015.
  • As the 15% discount to NAV objective has not been met, we estimate that FP would need a tender offer of RON 1.4-1.5b in order to reach it by year-end.
    • If the tender offer would be made for 100% of the shares to be repurchased during the sixth buyback, the cash return would need to stand at RON 1,514m implying a tender offer price of RON 1.6976 per share that would reduce the NAVPS to RON 1.0985 and would raise the market price to RON 0.9337.
    • If the tender offer would be made for 80% of the shares to be repurchased, the cash return would need to stand at RON 1,418m implying a tender offer price of RON 1.9873 per share that would reduce the NAVPS to RON 1.0884 and would raise the market price to RON 0.9252.
  • With the funds available at the end of August, FP would be able to reduce the discount to NAV to some 25% through a tender offer by year-end. 
    • If the tender offer would be made for 100% of the shares to be repurchased during the sixth buyback, the cash return would need stand at RON 854m implying a tender offer price of RON 0.9581 per share that would reduce the NAVPS to RON 1.1664 and would raise the market price to RON 0.8748.
    • If the tender offer would be made for 80% of the shares, the cash return would stand at RON 759m implying a tender offer price of RON 1.0637 per share that would reduce the NAVPS to RON 1.1551 and would raise the market price to RON 0.8663.
  • We estimate that FP would need a tender offer of RON 1.1b in order to reach a discount to NAV of 20% by year-end.
    • If the tender offer would be made for 100% of the shares to be repurchased during the sixth buyback, the cash return would need stand at RON 1,194m implying a tender offer price of RON 1.3389 per share that would reduce the NAVPS to RON 1.1315 and would raise the market price to RON 0.9052.
    • If the tender offer would be made for 80% of the shares, the cash return would stand at RON 1,098m implying a tender offer price of RON 1.5392 per share that would reduce the NAVPS to RON 1.1208 and would raise the market price to RON 0.8966.
  • Our view. Given the cash return and offer price implied, we do not believe that the 15% discount target would be reached through a tender offer by year-end. The other two scenarios are more plausible in case the Fund targets the discount reduction this year. FP RO is currently traded at a 30% discount to NAV. For further information pls contact Daniela Mandru +4021.408.4216.
  • Please see the computation in the attached excel spreadsheet.
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