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Fondul Proprietatea – government wants review of manager agreement and approach

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The Romanian Ministry of Finance, which has a 5.96% stake in Fondul Proprietatea, has added a few extra resolutions for investors to consider at its upcoming shareholder meeting on 25 September 2023.

First is a resolution that Franklin Templeton’s contract is renewed for just one year (1 April 2024 to 31 March 2025).

Second a resolution that says “The board of nominees is empowered to initiate, organise the transparent selection procedure for a new fund manager and to establish new objectives, performance criteria and remuneration conditions realigned with these objectives and present them for approval by the GSM” GSM here stands for general shareholders’ meeting.

Third covers new terms and conditions for the evaluation and remuneration of the manager.

The statement says “The rationale behind our request is to put Fondul Proprietatea back on a medium and long term investment track, aligned with Romania’s economic development priorities. This realignment can be achieved by establishing a new mandate for the fund manager and by modifying the performance evaluation and remuneration indicators.

“Fondul Proprietatea can respond to a real need for financial market development – the (partial) coverage of the local contribution to private equity funds co-financed by the PNRR (national recovery and resilience plan). In this area, Romania aims to create up to 20 funds, with European funding of €400m and a corresponding need for local co-financing of at least €200m. In perspective, the development of this ecosystem of private equity funds will provide the Romanian industry with a broad, competitive, sophisticated and deep palette of investors.

“Given that the current manager’s mandate expires on 01.04.2024 and that a selection procedure can be completed within a reasonable period of 1 (one) year, it is necessary to ensure the management of the Fondul Proprietatea during the selection procedure. ”

[QD comment: Much as the UK government – with its Mansion House reforms – is looking at ways to support British industry, so too are a swathe of European countries, including Romania. With the Hidroelectrica sale done, the rump Fondul Proprietatea seems to be viewed as a potential backer for this. It remains to be seen whether Franklin Templeton will hang onto its job in those circumstances.]

FP. : Fondul Proprietatea – government wants review of manager agreement and approach

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