Romanian Investment Fund stand-by for another year

The Romanian Investment Fund, one of the investment funds to have been established in those times of euphoria right after the 1996 elections, decided to extend its life by one year, hoping it would sell its businesses better than it could at the moment.

As far as this fund is concerned, the five years of scheduled existence did not materialise in such large investments in Romania. Now, at the end of this period, Romanian Investment Fund (RIF) has a net asset worth half of the total investment.

“Our fund’s share value currently amounts to $530, compared with $1,000 when we became operational. This means we have practically lost half of the money invested,” Florin Dolea, general manager of East Fund Management, the company administrating RIF, told Ziarul Financiar.

The Fund has gradually come to invest $60 million in several businesses on the Romanian market. According to the establishment papers, the fund was to close in May next year.

Because there are not many buyers on the market, or if there are, they offer much too little for taking over RIF’s shareholdings, the administrators postponed the deadline for making an exit.

“We have decided to give the fund one more year of life so that we would not find ourselves having to sell it off in a rush,” Dolea added.

The poor condition of the fund disappointed its shareholders, with a change in the administrating company currently considered, market sources say.

RIF’s situation in terms of possibilities to back out of the companies in which it has significant shareholdings (Imsat Bucharest, Policolor Bucharest, Terapia Cluj-Napoca, Rolast Pitesti etc) is not bright at all.

Most of RIF’s investments were started in 1997 and 1998. In the meanwhile, the companies in which the fund holds stakes should have become attractive for strategic investors to buy them. The trend of the Romanian economy in general and of certain economic sectors on which RIF bet, especially, made sure things are not as good as planned.

Even though most of the companies in which RIF holds stakes are positioned on the market segments on which they operate and logged good financial results for H1 this year, the leading international drug, dyes or technical rubber makers are not rushing to form a line by the fund’s door to buy shares.

“RIF will not invest in a new business and will think of supporting the existing investments only exceptionally,” Dolea said. “Let’s take Policolor for instance. We tried to study the foreign market of dye producers and of chemical producers in general. We’re not thinking only in terms of selling shares, but also in terms of closing partnerships,” the administrator mentioned.