The Bucharest Stock Exchange, ranked as one of the world’s best-performing, and its new largest shareholder, European Bank for Reconstruction and Development (EBRD), have set their sights on becoming a financial hub for the region. They eye MSCI emerging-market status within three years, substantial increases in capitalisation and greater participation by foreign investors and pension funds.
Noel Edison, the EBRD’s director for insurance and financial services, told Financial Times, he expected Romania’s privatisation programme to continue through the bourse, raising liquidity and following several successful initial public offerings by state-owned companies. „Criteria for emerging-market status set out by MSCI include, among other things: firstly, a minimum of three relatively big companies; secondly, a high degree of openness to foreign ownership; and thirdly, ease of capital inflows and outflows. The BVB is expected to achieve compliance with all the requirements in 2016,” Edison said.
One of the most promising companies being lined up for an IPO on the exchange is Hidroelectrica, as its name suggests a hydroelectric operator. The company is undergoing a restructuring programme and is expected to exit insolvency next year.
„To-date there has been significant progress made in implementing the Government’s privatisation programme based on the current agreement with the IMF under which there have been some of the largest IPOs of state owned companies, including Electrica in 2014 (EUR 444 million), and Romgaz (EUR 380 million) and Nuclearelectrica (EUR 63 million), both in 2013. These transactions have positively impacted market capitalisation and liquidity, and are expected to be followed with the planned IPO of a number of other state owned companies, the largest of which may be Hidroelectrica. With the IPO process improved, we hope to see more listings in the years to come and we will be looking into ways to support them,” EBRD official said.
More offers may come from Fondul Proprietatea, a fund set up to compensate those who lost property under communism, which is itself listed on the BVB, and potentially from closed-end funds selling their stakes on the open market.
„Given the puzzling lack of interest that businesses in the western Balkans show in Romania – the region’s largest market – becoming a true centre for the region may involve a new approach to marketing as well. But the BVB is headed by a former CEO of the Warsaw Stock Exchange (ed. note Ludwik Sobolewski), which has become the largest bourse in Central Europe, overtaking Vienna, so there is a track record of success,” FT analysts note.