Romanian Deputies Approve Increase in SIFs Ownership Limit

Romania’s parliament approved an increase in the ownership limit for the country’s five investment funds, known as SIFs, to 5 percent from 1 percent.

Lawmakers voted 170-63 today in favor, Horia Uioreanu, a member of the chamber of deputies, said by phone today.

“This approval shows foreign and domestic investors that initiatives are not neglected in Romania and it’s positive for the funds as investors can now put their money into larger stakes,” Liberal Democrat Ovidiu Marian, the initiator of the law draft, told The Money Channel television after the vote.

The ownership limit increase, which has been working its way through parliament for three years, aims to boost interest for investors in the funds, which were created after the fall of communism to allow citizens to hold minority stakes in companies and banks.

BET-FI, the index that tracks all the five SIFs, rose as much as 13.6 percent, the most since April 2009 after the news and was up 8.8 percent as of 3.40 p.m. in Bucharest to trade at 19,709.9.

The five SIFs own minority stakes in Romania’s largest companies, such as OMV Petrom SA, Transgaz SA (TGN) and BRD-Group Societe Generale SA. (BRD)

Erste Stake

Each of the SIFs will also own about 1 percent of Erste Group Bank AG (EBS), following a share-swap and cash transaction with the Austrian lender for their 30 percent stake in Banca Comerciala Romana SA, Romania’s biggest bank by assets.

“Improvement in corporate governance, asset management and the decision-making process are the main effects which lure investors, with direct impact to be reflected in the SIFs’ net- asset value discounts,” analysts at NBG Securities Romania SA said in a note to clients after the vote. “We expect a positive impact on the SIFs.”

The five SIFs are SIF Banat-Crisana SA (SIF1), SIF Transilvania SA (SIF3), SIF Muntenia SA (SIF4), SIF Oltenia SA and SIF Moldova SA. (SIF2) They originate from Romania’s five Private Property Funds, established when parliament adopted the country’s first privatization law in 1990.

The law split most of the state’s property among the State Ownership Fund, which had 70 percent, and Romanian citizens, who received the remaining 30 percent. The ownership limit was introduced in 1997 at 0.1 percent and was increased to 1 percent nine years later.

“The increase in SIFs limit is a step forward towards developing the real potential of the Romanian capital market,” said Dumitru Beze, the head of an independent association of investors in a phone interview. “On the medium-term the prices for some of the SIFs shares will increase as the management will become more transparent and work in the investors’ interest.”

To contact the reporters on this story: Andra Timu in bucharest at atimu@bloomberg.net; Irina Savu in Bucharest at isavu@bloomberg.net

To contact the editor responsible for this story: James M. Gomez at jagomez@bloomberg.net

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