For the last two years, BRD (Romanian Development Bank) officials have been saying that they intend to finalise the bank's privatisation through the Bucharest Stock Exchange. Now, the Government is dealing a blow below the belt to the Romanian capital market.
At a time when the BRD stock is among the market stars and all the investors and brokers are holding their breath, waiting to buy the 7.32% stake that the State still holds in the bank, the Government has discreetly decided to pass on the most transparent privatisation method - the capital market.
The Official Gazette last Friday ran a Government Decision stipulating that "the stake held by the State in the Romanian Development Bank SA, which is in the portfolio and under the administration of the Authority for Privatisation and Management of State Holdings (APAPS), will be sold to one or several investors, Romanian or foreign legal persons, by negotiations based on final, improved and irrevocable bids."
Moreover, although BRD has been trading on the Bucharest market for almost two years and the shares already have a price, the Government has decided to ignore the market and sell the stake by direct negotiation, outside the market.
"This is a very unpleasant surprise. As Government officials have long been saying they will support the floatation of state-owned companies, the decision to sell the BRD shares outside the market is inexplicable. We can practically speak of the bank's delisting," Stere Farmache, the general manager of the Bucharest Stock Exchange told Ziarul Financiar.
BRD shares have been listed since 2001 and have soared in the past three years, mainly due to interest from the foreign investors. The bank's market capitalisation currently amounts to 1.2 billion dollars, after having been assessed at 400 million dollars upon privatisation, in 1998.
The bank's stock has climbed almost 35% this year, whereas brokers and analysts are complaining about the shares' lack of liquidity and asking for the APAPS stake to be sold on the Bucharest Stock Exchange. Many brokers have repeatedly said that there were significant Buy orders for BRD, launched by foreign investment funds, but they could not honour them because no shares were on sale.
The Bucharest Stock Exchange management has been lobbying APAPS for almost a year, requesting that the BRD privatisation be completed on the capital market, an initiative that was supported by the statements made by the head of APAPS, Ovidiu Musetescu.
"There will probably be a two-stage sale, with the first including the sale of a 'balloon stake', to see how the capital market reacts. This stake will be sold by yearend," Musetescu had said last fall.
One BRD share is currently priced at 26,500 ROL, which means that the APAPS stake (7.3%) is worth 84 million dollars.
Even if the price of BRD shares is set by market supply and demand (the most credible assessment on the Western markets), the Government stipulates, in the same Decision, that "in view of finalising the privatisation process by selling the stake owned by the State in the Romanian Development Bank SA, the Privatisation Board will shortlist a specialised company to draft the evaluation report."
laurentiu.ispir@zf.ro ; oana.nuta@zf.ro
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