SocGen Fund halfway out of Romania

One percent in Orange (former MobilRom), 20% in La Dorna, 14% in Luxten and 7.72% in Policolor. This is what one of the largest investment funds in Romania, SociA©tA© GA©nA©rale Romania Fund (SGRF) will have for sale next year. SGRF came to Romania in 1997 and has invested more than $40 million ever since; its life span is coming to an end in March 2004.
Due to the incoming exit, the liquidation of SGRF’s interests began as early as last year, when it sold its stakes in Arctic (25.48%), Dorna Apemin (20%) and Electroaparataj Bucharest (15.01%). It also started procedures to sell its 35% in Megapress printing company early this year.
Razvan Cretu, SGRF investment manager says the fund is now considering the best exit options for every company still in its portfolio, yet it will not rush to sell whatever left.
“The fund has until March 2004, when the shareholders are to decide what happens next. Any fund manager may request an extension of the life span if they can prove the investments are basically good,” Cretu told Ziarul Financiar.
The overall bad shape of the world economy and the reticence of foreign investors towards the Romanian market have made most of the investments funds raised especially for Romania in 1997-1998 sell in unfavourable terms when coming near the end of their life span and reaching the maturity of the investments.
This was SGRF’s case, too, which collected some $5.1 million for its Arctic stake, less than it had paid upon privatisation of the company. Arctic was bought by Turkish group Arcelik last year.
SGRF, however, is doing better than the funds that mainly invested in companies listed on the Stock Exchange and which may therefore end their life span at a loss.
SGRF started out with $42 million, returned $20 million (from sales of stakes and dividends) to its shareholders and holds five interests for which it can get more than $30 million under normal exit circumstances.
“I cannot make any forecast about the prices we might get. The fund is listed in Dublin and this is in breach of the market rules,” Razvan Cretu said.
SGRF’s main interests, in terms of value and perhaps yield, are those in Luxten and Orange. Since Orange has been recently valued at one billion dollars by its CEO, Bernard Moscheni, SGRF’s stake (1%) is worth $10 million.
Luxten is estimated to be worth at least $100 million by sources on the market, so that the fund’s 14% could amount to $14 million.
Even though Luxten has been developing explosively over the last few years and has a good financial position, SGRF’s exit could be difficult. Luxten is one of the most complex companies in Romania (dealing in public lighting, meter and lighting sources production, electrical power distribution and IT) and its potential buyers, the international groups dealing in the same fields are now going through difficult times.