Shareholders of Fondul Proprietatea decided on February 13 to reject a proposal made by the fund’s manager Franklin Templeton to sell stakes in the national salt company Salrom, the Bucharest Airports company and Constanta port.

The Romanian government, a shareholder in Fondul Proprietatea, has a fundamentally different approach to Franklin Templeton. The fund manager’s policy is to bring Fondul Proprietatea’s price in line with the value of its portfolio and cash the portfolio as close as possible to its value. Meanwhile, the Romanian government wants to turn Fondul Proprietatea into a more active player, for example by investing into infrastructure projects financed under the National Recovery and Resilience Plan (PNRR). 

The fund’s shareholders include the Romanian finance ministry with 10.4% voting rights and Romanian institutional investors (mainly pension funds) with 39.3% voting rights. 

The government initially attempted to block all the exits planned by Franklin Templeton, for which it reportedly approached the pension funds to get support, but it failed to block the sale of Fondul Proprietatea’s stake in energy company Engie, a natural gas and electricity supplier and natural gas distributor. 

Fondul Proprietatea will thus sell its 12% stake in Engie and will use the cash proceedings of RON433mn (€87mn) to buy back its shares.

“The reason behind our request [to stop all exits at Fondul Proprietatea] is the planned reorientation of Fondul Proprietatea on a medium- and long-term investment path, aligned with Romania's economic development priorities. This realignment can be achieved by drawing a new mandate for the fund manager and by changing performance evaluation and remuneration indicators [for the fund manager],” Minister of Finance Marcel Bolos explained.

The Romanian government wants to involve Fondul Proprietatea to co-finance private equity investment funds that will be created under the PNRR.  Romania aims to create up to 20 such funds, with a European financing of €400mn and local co-financing of at least €200mn. 

“In perspective, the development of this ecosystem of private equity funds will offer the Romanian industry a wide, competitive, sophisticated and deep range of investors," Bolos said.

In September, Fondul Proprietatea shareholders renewed Franklin Templeton’s mandate for just one year, as the Romanian government plans to find a different manager whose approach is more in line with its proposed development strategy.