REPORTERNET.COM

Fondul Proprietatea is a national fund unlike any other. It was set up in December 2005 to compensate people whose assets were confiscated under Romania’s Communist regime and has no equivalent elsewhere in eastern Europe.
Moreover, investment management has been outsourced to a single fund manager, Franklin Templeton, which manages about €3.3bn of Romanian state assets.

Strangest of all, perhaps, the closed ended fund has become an aggressively activist fund and is currently suing the government that created it.
All in all, not your average investment fund.
And yet foreigners are starting to buy into it. Since its listing in January last year to allow restituant claimants to sell their shares, institutional investors have snapped up 43 per cent of Fondul’s equity, including Elliott Associates, the US activist hedge fund that has made its name suing emerging market governments around the world and is not known for throwing its money away.
So why the interest?
First, there is the allure of Franklin Templeton’s Mark Mobius, a legendary emerging markets investor who has spent the past 25 years travelling the globe unearthing investment opportunities.


Then it is a play on the energy sector, with most of the 75 companies in the fund connected to energy in some way. This is attractive to institutional investors seeking new ways to increase their allocation to commodities in the expectation that prices will rise over the long term.
 Perhaps most significantly, its shares languish at a 60 per cent discount to net asset value, attracting deep value investors.
Nevertheless, investing is still a leap of faith. It is a play on the Romanian economy, on the willingness of the Romanian political elite to enact reform and on whether Franklin Templeton can guide the state-run companies to higher levels of corporate governance.


(source: www.sofiaecho.com)