ROMANIA - The Romanian stock market is "ridiculously underrepresented" given the country's population and potential GDP, but there are some positive signs, according to the restitution fund Fondul Proprietatea.
Recently, the head of pension supervisor CSSPP criticised the fact institutional investors had too few opportunities to invest in Romania.
Grzegorz Konieczny, executive vice-president at Franklin Templeton Investment Management in Bucharest and fund manager of the €4bn Fondul Proprietatea, told IPE: "His statement was correct because a country like Romania at the current stage of its development should have a much bigger stock exchange."
David Smart, global head of sovereign funds at Franklin Templeton Investments, added there was "no doubt" that, relative to the population, GDP, potential GDP and depth of natural resources in the country, the stock exchange is "ridiculously underrepresented" in Romania's economy.
The total market capitalisation of the Bucharest Stock Exchange was around RON111.7bn (€27.3bn) in mid-June.
However, Konieczny pointed out that there are "positive drivers to address this issue" and said he was optimistic for the future.
His listed fund is 95% invested in Romania and makes up around 50% of the daily turnover of the stock exchange, but many of its holdings are currently still unlisted.
"We are pushing for the privatisation of state companies that are in our portfolio, as we know that the future success of the Fondul Proprietatea is very much linked to the stock exchange," he said.
He mentioned several large IPOs expected in the near future, with Petrom planning a €500m secondary offering and both Transgaz and Transelectrica seeking €100m each.
The largest aluminium producer in the country, Alro, wants to place €200m in shares this month.
"Offerings of this size have not happened before, and if they are successful, we will see more following, and more investors participating," Konieczny said.
Smart said Poland and the Czech Republic were good examples of how the privatisation process could end in a "beneficial cycle".
Konieczny said the Bucharest stock exchange had been exposed to a number of scandals and corruption issues in its early days, putting a lot of people off - "but now this is hopefully going to change".
He added the Fondul Proprietatea was a major driver behind setting standards in corporate governance, reporting and disclosure, as well as in addressing malpractice in the market.