Fondul Romano-American pentru Investitii (Romanian-American Investment Fund) is interested in buying stock in ARDAF insurance company, which is currently undergoing a capital increase from 37bn to 175bn lei.
Sources on the insurance market told Ziarul Financiar that FRAI officials had already conducted a series of talks with ARDAF management in order to participate in the private placement by which the insurer’s capital was to reach 175bn lei.
“I am not at liberty to comment on this information,” said Steluta Racolta, ARDAF chairman. Joel Hayes, FRAI vice-president, declined to comment, as well. “I can say neither yes nor no,” Hayes said.
The quoted sources say FRAI has requested an independent audit to certify the company’s financial status and its position on the market. The talks have reached an impasse, though, as the two parties have yet to come to terms about the audit cost issue.
ARDAF has been trying to find a strategic investor ever since last year, which should help it withstand the competition on the insurance market. It began talks with Australia-based QBE Group last fall, but discussions were slow to progress.
QBE did not give up the project, though, specifying ARDAF would be its first choice when it decided to enter the Romanian market. At the same time, QBE does not prohibit ARDAF from conducting talks with other investors. The contacts will reportedly be resumed in the second half of this year.
ARDAF has just doubled its share capital to 74bn lei, by including the gaps resulted from the reassessment of intangible assets in its patrimony at the end of last year.
The new shares were distributed free of charge to the company’s shareholders registered by March 30, 2001, according to the percentage held by each of them. The gap from 74bn lei to 175bn lei is to be covered by cash, with FRAI likely to subscribe the entire amount.
At present, ARDAF’s main shareholder is SIF Transilvania, with 41%. June 16 is the deadline for the current shareholders to exert their pre-emption right for buying shares.
FRAI was set up in 1994, registering $65 million in start-up capital allotted by USAID. Its current portfolio includes major investments, that is $30.3 million in 16 companies. 57% of the money is placed in productive companies.
Early in 1999, FRAI became Banca Romaneasca’s main shareholder in which it now holds 68.9%. Furthermore, FRAI teamed up with Raiffeisenbank for a consortium that signed the sale-purchase contract for 98% in Banca Agricola with the Privatisation Authority.
It also has investments in other Romanian companies listed on the capital market, such as Policolor and Rolast or in closed companies.