PM Nastase: Give Bourse a chance!

“I believe the capital market deserves better. We have been missing out on this extraordinary resource.” This is the conclusion voiced by Premier Adrian Nastase after his first year of governing.
According to the PM, the stock exchange needs to be used “much more” and that is precisely why he has asked the ministers to boost the privatisation of state-owned enterprises by selling part of their shares on the capital market, even before the regular privatisation process begins.
“I have been pushing for a long time for part of Petrom’s stock to go to the Stock Exchange, and this also goes for Banca Comerciala RomÄsna (Romanian Commercial Bank – BCR),” Nastase told the Romania Top 100 conference organised by Piata Financiara yesterday.
In the Premier’s opinion, the state has to choose from two privatisation strategies in the case of BCR. However, the current strategy stipulates privatisation with a strategic investor.
“If we place, let’s say, a 5% stake on the Stock Exchange, we would already have a predetermined price when the time for privatisation comes. However, if the market is unable to absorb the BCR shares and sets a low price, this would give a very bad price indication for privatisation. This is the risk of listing,” the chief of Executive explained.
Romania’s largest company, Petrom, has a better shot at selling an additional stake on the bourse. Seven percent of Petrom shares are already traded on the market, as they belong to private investors. The state holds a 93% stake through the Industry, Finance and Labour Ministries.
“We will consider the possibility that a 7-10% stake in Petrom should be listed on the stock exchange prior to privatisation (i.e. the sale of the main stake). I believe this would also benefit the company,” said the Industry minister Dan Ioan Popescu. Petrom has reached 1.6 billion dollars in market capitalisation.
The demand for Petrom shares is very high, especially from the foreign financial investors. However, it is difficult to get the big foreign investors to Romania with only 7%.
“The time is right and the market does need more shares and more investors. If a Petrom stake was put up for sale on the Stock Exchange, this would increase the investors’ interest in the company; a free-float of 7% is deemed as small. There are investment funds that cannot buy the shares of a certain company simply because their operating status won’t let them enter companies with a free-float below 10-15%,” Stere Farmache, director general of the Bucharest Stock Exchange told Ziarul Financiar.
According to Farmache, investors are obviously interested in the banking system, as proved by the good performance of the listed banks – BRD (Romanian Development Bank) and Banca Transilvania. “I don’t see why it should be any different in the case of BCR, especially since it is a large bank, which would considerably increase the bourse capitalisation,” Farmache says.