Investment Strategy

Investment Objective

FP’s investment objective is the maximization of returns to shareholders and the increase of the net asset value per share, through investments predominantly in Romanian equities and equity linked securities, subject to legislation and regulations in force.

Performance Objectives

Discount Objective

The discount between the closing price for each Trading Day on the Bucharest Stock Exchange (the “Trading Day”) of the shares issued by FP and the latest reported NAV per Share should be equal to or lower than 15% in at least two thirds of the Trading Days during the Reporting Period (as defined in the IMA) (the “Discount Objective”).

NAV Objective

The Fund Manager should achieve a level of Adjusted NAV per Share (as defined below) higher than the reported NAV as at the end of the previous Reporting Period (term used herein as defined in the IMA) (the “NAV Objective”). For the avoidance of doubt, the term “previous Reporting Period”, when applied to a first Reporting Period under the IMA, is to be understood as being the last Reporting Period derived from either the current or the previous IMA.

The adjusted NAV (the “Adjusted NAV”) for a given date will be calculated as the sum of:

(i) the reported NAV as at the end of the Reporting Period;

(ii) any distributions to shareholders, being either dividend or non-dividend ones (i.e. in this last case following reductions of the par value of the shares and distribution of the decreasing amount to the shareholders), implemented after the end of the previous Reporting Period, and

(iii) any Distribution Fee (as defined in the IMA) and any transaction and/or distribution costs relating to either dividend or non-dividend distributions including buy-backs of shares and/or Global Depositary Receipts (“GDRs”) and/or depositary interests executed, through daily acquisitions or public tenders, after the end of the previous Reporting Period.

The Adjusted NAV per Share will be equal to the Adjusted NAV divided by the total number of the Fund’s paid shares, less treasury shares (FP ordinary shares bought back) and less equivalent in FP ordinary shares of FP GDRs acquired and not yet converted into FP ordinary shares, on the last day of the Reporting Period (the “Adjusted NAV per Share”). 

 

Investment limits for Fondul Proprietatea SA starting with 23 July 2020

Starting with 23 July 2020, according to article 35 of Law no. 243/2019 on alternative investment funds and for the amendment and completion of other legislation, the investments of the Fund shall be subject to the following limits:

a) the Fund cannot hold more than 10% of its assets in securities and money market instruments issued by a single issuer, except for securities or money market instruments issued or guaranteed by a member state, by the public local authorities of the member state, by a third country or international public entities to which one or more member states are part. The 10% limit may be raised to 40% provided that the total value of the securities held by the Fund in each of the issuers in which it holds 40% does not exceed 80% of the total value of its assets;

b) the Fund cannot hold more than 50% of its assets in securities and money market instruments issued by entities belonging to the same group, defined as the parent company and its subsidiaries, and in case of the group of the sole manager of the Fund, this limit is of 40%;

c) the exposure of the Fund to counterparty risk in a transaction with derivatives traded outside regulated markets cannot exceed 20% of its assets, regardless of the transaction counterparty;

d) the global exposure of the Fund to derivatives cannot exceed the total value of its assets;

e) the value of the current accounts and the cash held by the Fund must not exceed 20% of its assets; the limit may be extended up to 50% of its assets, provided that the respective amounts come from issuance of equity securities, mature investments or from the sale of financial instruments from the portfolio and that such extension does not last for more than 90 days;

f) the value of the bank deposits set up by the Fund with the same credit institution cannot represent more than 30% of its assets;

g) the Fund cannot hold more than 20% of its assets in equity securities not admitted to trading on a trading place or on a stock exchange from a third country, issued by a single retail alternative investment fund (AIF);

h) the Fund cannot hold more than 10% of its assets in equity securities not admitted to trading on a trading place or on a stock exchange from a third country issued by a single AIF for professional investors;

i) the Fund cannot hold more than 50% of its assets in equity securities not admitted to trading on a trading place or on a stock exchange market from a third country issued by other open - end AIF. The limit is set at 40% of its assets for the entities belonging to the group of the sole manager of the Fund;

j) the Fund cannot hold more than 40% of its assets in equity securities issued by a single UCITS authorised by the Financial Supervisory Authority (the “FSA”) or by a competent authority from a member state or in equity securities issued by a UCITS admitted to trading on a trading place in Romania, other member state or a stock exchange from a third country;

k) the Fund cannot grant loans of financial instruments which represent more than 20% of its assets and the loans cannot exceed 12 months, in accordance with the regulations issued by the FSA regarding trading margin and loan operations; the 20% limit may be increased to 30% of its assets, with the approval of the FSA, in accordance with the conditions established by the FSA;

l) the Fund cannot grant loans in cash, cannot participate/subscribe syndicated loans, cannot secure loans in cash in favour of a third party, except for entities belonging to the same group as the Fund, incorporated as investment funds, not exceeding 10% of its assets, and cannot purchase directly or indirectly, partially or totally, credit portfolios issued by other financial or non-financial institutions, except for investments in financial instruments issued by internationally-recognized financial institutions, credit institutions or non-banking financial institutions authorized by the National Bank of Romania or other central banks from a member state or from other third country;

m) the Fund cannot hold more than 40% if its assets in securities, money market instruments which were not admitted to trading on a trading place or a stock exchange from a third country, except for government bonds issued by the Ministry of Public Finance, as well as the holdings acquired by the Fund by virtue of law, in which case no holding limit is established;

n) the Fund cannot hold more than 20% of its assets in shares issued by limited liability companies regulated by Law no. 31/1990, republished, as amended and supplemented;

o) the Fund cannot hold more than 10% of its assets in greenhouse gas certificates, as these are regulated by the legislation in force.

 

Exercising the preference right related to existing holdings, acquired by the Fund from the Romanian State under other regulations, does not lead to exceeding the limits described above.

 

In case of exceeding the limits described above, exclusively in cases independent of its will, the sole manager of the Fund has the obligation to comply to the legal requirements within 30 days as of the day of exceeding the certain limit, except for the case in which the investment portfolio of the Fund assigned under certain regulation does not reasonably allow the compliance within 30 days.