Moldovan wine listed on NASDAQ

The poorest country in the entire Europe, the Republic of Moldova, has come to cultivate grapevine with money from the American stock markets. The leading private winemaker in this country, Asconi, has been listed on a section of NASDAQ, the largest over-the-counter market in the world, since April, this year.

How did a company from an investors forsaken country, where communists won the latest elections, manage to step right in the heart of capitalism? The companies listed on NASDAQ are mainly those in the new economy: Microsoft, Compaq or Oracle.

“You have to be a little bit bold,” says Constantin Jitaru, chairman and one of the company’s founders. “We got the idea from the contacts we had with the international financial environments. We ran on EBRD credits for a while, but this is a complicate thing to do and the interests are not that good, either.

The stock market, on the other hand, is just the perfect mechanism to attract investments to our downtrodden land,” Jitaru explains.

Asconi, which has 200 wine sorts in its portfolio, made nearly $5 million in 2000’s turnover, five times higher than in 1999, while the profit went up from $180,000 to more than $720,000.

In order to get listed on NASDAQ, Asconi bought a shell company (a company listed but not operational) and underwent audits by KPMG for quoting purposes and PricewaterhouseCoopers for evaluation, Jitaru says.

The company has issued some 1.6 million shares at an average price of $7.2 each, that is $11.8 million. What will it do with this money? “A 10,000-ha plantation in Moldova and an alcohol and spirits mill,” Jitaru answers. The plans are even bolder, though. “We want to buy a winemaking factory in France and another one in California. We want to become a little international wine mastodon.”

Going public in America did not intimidate the company founders, at all. Actually, as Constantin Jitaru feels, it is the Americans who need a company like Asconi, and not the Moldovans who need money from NASDAQ.

No company from Romania or Moldova has been listed on the American stock markets so far. Three Romanian companies, Societatea “R”, Elvila and Banca Turco-Romana (Turkish-Romanian Bank) have tried their hand at international stock markets (London), but failed.

Few were even listings of newly established companies by issue of shares on the Bucharest Stock Exchange. Would it have been better for Asconi if it had chosen the Romanian stock market instead? “We thought of getting on the American market because we stand big chances of getting many fresh investments.

From what we have seen so far, we may say the American society has a problem when it comes to finding a use for money. With 3% inflation and a 5% interest offered by the bank, 2% in yield is little,” Jitaru explains.