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Unclear Sale of Bulgaria’s Biggest Pension Fund Hurts Business

The chairwoman of Doverie, Bulgaria’s biggest pension fund, said her company is being hurt by a lack of information on United Capital Plc’s purchase of a 92 percent stake in the Sofia-based company.

Vienna Insurance Group (VIG) AG said on July 15 it concluded sale negotiations with U.K.-registered United Capital, without providing the transaction price or other details. A spokeswoman for Bulgaria’s Financial Supervision Commission said no documents have been received to begin the approval process.

“We haven’t met any representatives of the buyer yet,” Doverie Chairwoman Daniela Petkova said in a phone interview today. “We don’t know who stands behind it. Our information is entirely from media reports and there is a great amount of speculation there which is worrying for our clients.”

Doverie’s management, led by Petkova offered to resign on July 12 over the lack of public information about the transaction. They remain in charge until a new management team takes over. The ruling Socialist party should ask the financial regulator to block the transaction because of an “unclear origin of the buyer’s capital,” Yanaki Stoilov, a Socialist lawmaker said in parliament on July 16.

Information from the fund’s 60 offices in the country shows an increased number of clients are moving their accounts to other funds, Petkova said. The value of Doverie’s 92 percent stake is estimated at as much as 150 million euros ($150 milllion), she said.

Confidence Crisis

The sale is taking place as Bulgarian political leaders are struggling to maintain public confidence and voters are increasingly aggressive about their dissatisfaction with what they see as a corrupt political system in the European Union’s poorest member.

Prime Minister Plamen Oresharski is besieged by 45 days of protests demanding his resignation. He came to power May 29 after anti-austerity protests forced out his predecessor, Boyko Borissov, and triggered snap elections.

Raya Tsvetkova, a public relations official at the Financial Supervision Commission said her office will analyze the transaction for at least a month, once documents are filed. She was unable to comment further on the process.

Doverie fund manages assets worth 1.86 billion lev ($1.26 billion) and has 1.256 million clients at the end of March, according to its website.

“Doverie is a big fund and processes are gradual,” Petkova said. “We’ll see the final figure of changed accounts in October when registrations are completed. I hope the buyer appears in Bulgaria as soon as possible to stop all speculations and calm down the clients.”

Buyer Assets

United Capital manages assets worth more than 2 billion euros ($2.65 billion), which include participation in insurance and industrial companies, real-estate funds, banks in the European Union, the U.S. and Russia, it said in a statement on July 26 in Vienna.

Sergey Mastyugin, a member of Invest Bank Russia’s supervisory board, is a “significant investor” in United Capital, according to the statement.

United Capital will hand over documents to Bulgarian regulatory authorities soon, the company said, while the funding will be provided “solely” by its shareholders.

“Long-term, responsible investment, open and transparent relationships with all of Doverie’s stakeholders are essential,” United Capital said. It’s interested in “various financial services sectors in the country” including an investment in Sofia-based Tokuda Bank, it said.

To contact the reporter on this story: Elizabeth Konstantinova in Sofia at ekonstantino@bloomberg.net

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

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