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Fondul Proprietatea: An anxious wait for the capital market

Romania’s privatization starts to pay off

In the great game of improving the capitalization of the Bucharest Stock Exchange, the government is about to play its trump card. In December 2005, it began preparations for the launch of the Fondul Proprietatea, a tool with the ostensible function of privatizing property that was confiscated by the communist regime and had not yet been returned to private hands.

As the closed end fund that covers some of this property will have assets of about €4 billion, its listing on the Bucharest Stock Exchange will provide a hitherto unparalleled boost to the Romanian capital market, whose market capitalization stood at €15.3 billion at the end of 2005. “The fund represents something very important to the capital market,” says Stere Farmache, general manager and CEO of the BSE. “The listing could bring the Bucharest Stock Exchange closer to other funds in the region in terms of liquidity and market capitalization.”

The fund’s assets consist of shares in former state-owned companies from the energy sector. The Fondul is currently administered by the surveillance council, which is part of the public finance ministry, but an international fund manager will be appointed to manage the fund when it is listed.

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