Fondul Proprietatea Saves The Day For Brokerage Houses

12.02.2011 By Andrei Chirileasa

Brokers that were quicker to get involved with Fondul Proprietatea (FP.RO) shares took the lions’ share of bourse transactions this year, while retail brokers suffered because of the exit of small investors from the stock exchange. The market recovered somewhat only in November, when regional investment funds SIFs returned to the spotlight.

Swiss Capital, UniCredit CA IB Securities, Raiffeisen Capital & Investment, ING, and Czech-held Wood brokered half the stock exchange transactions in the first 11 months of this year, sharing the bulk of transactions involving Fondul Proprietatea shares.

The listing of Fondul Proprietatea was a godsend for the large brokerage firms on the market, which now had a new share to sell to the large foreign investment funds after years of struggling to place the same SIF regional investment fund shares, Petrom and BRD shares.

Fondul Proprietatea again put the Bucharest stock exchange on the screens of the large foreign investors, who had the opportunity to buy the most valuable assets in Romania (20% stakes in Petrom and Hidroelectrica, 15% in Romgaz) at a bargain. So, whereas for the former property owners who received Fondul Proprietatea shares in compensation, the listing was a failure, it was a big opportunity for foreign investors and for their brokers.

In the first 11 months of the year, the value of transactions with Fondul Proprietatea shares amounted to over 4.8 billion lei (EUR1.1 billion), i.e. more than half the overall stock exchange transactions. Foreign funds ended up holding over 40% of Fondul Proprietatea shares.

Swiss Capital brokered the biggest transactions involving the fund's shares, accounting for a quarter of overall stock exchange transactions, a share that no other brokerage has achieved in the last ten years.

Swiss Capital brokers, led by Bogdan Juravle, became involved in trading the fund's shares even before the fund was listed on the stock exchange, when they were traded on the grey market, and managed to attract a lot of clients who sold their shares to foreign funds after the listing.

Czech broker Wood and Austria's UniCredit did the same, listing structured warrants on the fund's shares in Vienna.

(English version by Daniela Stoican)