The Romanian Government seems to have taken a short brake in the race for choosing the manager. Adopted in rush, the legislative package which regulates the administration of the Property Fund wasn’t published yet in the Official Gazette. Governmental sources sustain that the specific laws were so much contested that the government officials are forced to debate them again. Moreover, according to the rumors, the winner of the selection is already established.

In mostly one month and a half we should all be acquainted with the new manager of the Property Fund. This if we take into account the calendar proposed by the selection commission directed by the former Ministry of Finance, Sebastian Vladescu. The legislative package made up from the organization regulation of the “auction” for choosing the administrator, the task notebook, the form of contract and the project for changing and/or completing the constitutive act of this institution were adopted in rush by the Government two weeks ago, the publishing in the Official Gazette being expected from one day to another. There are also voices that assert that the Government has dropped out to the rush of arranging the future of the Property Fund. Fact that confirms if we take into account that publishing in the Official Gazette was scheduled for last week. Governmental sources sustain that the normative acts were mostly contested, so the Government will have to discuss them again before sending them for being published. ”The manager of the Property Fund will be selected in the middle of December through competitive dialogue and by handing in the initial and final offers in which will be taken into account the lowest costs for the Fund, being accepted only the companies which have administrated during the last two years total assets of over 30 billion euro. The administration company will have to dispose also of a professional liability insurance of at least 50 million euro”, it is shown in the task book approved in the meeting from the middle of October. The pressed schedule has generated vast disputes, not just in political plane, but also inside the Property Fund where the war between Directorate and the Supervisory Council, on one hand, and the Vladescu commission, on the other hand, have come to a head.

Who are the favorites

According to the selection regulations the stages that must be get over are the following: preselection, in which are chosen between three and five candidates; competitive dialogue in which are chosen mostly three candidates and the thirds stage which consists in presenting the final offers and the winner is selected. As it was expected, the rumors have already designated a winner even if the auction procedures weren’t started. The sources from the market consider that winner at “points” is Erste through BCR Asset Management, the only one from Romania which has hand in the intention letter till the moment. The strong argument is given by the previous co-operation of Sebastian Vladescu with Erste in the privatization process of BCR, the former Minister of Financing choosing the method from the Commercial Bank for selecting the admini- strator. The list of the companies interested of administrating the Property Fund comprises among others: Morgan Stanley Investment Management; HSBC Bank Plc - HBEU (Great Britain); Deutsche Bank (Germany); Goldman Sachs Asset Management (Great Britain); The Royal Bank of Scotland Asset Management (Great Britain); the consortium made up by Unicredit and Proctor Investment Managers; BNP Paribas Asset Management (Austria); NCH Advisors (United States of America); ING Asset Management (The Netherland); Allianz Global Investors and Allianz Investment Bank AG from Austria; Raiffeisen Capital Management (Austria) or Fortis Investments (Austria). The Property Fund is owned at the moment by the Romanian state, in percentage of 79,14%, the rest of 20,85% belonging to the private shareholders. On July 30, 2008, the amounted value of the Property Fund assets was of 14.773.185 thousand lei.

 

Daniela Lulache: the deadline for selecting the administrator is realistic, but it isn’t efficient or optimum

 

The Directorate of the Property Fund has formulated several notifications about the legislative package adopted by the Government and has sent them to the Ministry of Finance, General Secretariat of the Government, CNVM or to the Ministry of Justice. On the list of notifications is also the one related to the pressed schedule of selection. The director of the Fund, Daniela Lulache has explained for “Financiarul” which are the main objections of this forum of management and which are the implications afferent to these measures.

Financiarul: You’ve formulated a set of objections related to the set of normative acts which was already adopted by the Government. Have you received any answer? Can the position of the Fund Directorate influence the publishing of these normative acts in the Official Gazette?
Daniela Lulache: Indeed, I’ve sent to different institutions our objections, but there must be précised the followings:
1. According to the stipulations HG 959/2008, the Property Fund is totally out of the process of editing, informing and approval of the normative acts related to the selection documentation. These responsibilities are entirely in the charge of the selection commission and of the Government.

2. The objections of the Property Fund were sent without being asked for and also because here, at least theoretically is gathered the most consistent information related to the possibilities and current and future needs of this organization.

In consequence: these objections can be taken into account or ignored, depending of the position of those who have this responsibility; they don’t have the obligation to answer us and we don’t ex- pect to receive answers. In what concerns our opportunity of influencing the normative act in the Offi- cial Gazette, the answer is: OUT OF THE QUESTION. The publishing in the Official Gazette takes place after Government’s approval, to its request.

How realistically do you consider the deadline given for choosing the administrator (till the middle of December) and in what measure can this be accomplished? Which are the risks of a “selection in rush”?
Related to the deadline for selecting the administrator: I think we can say that it is realistic. This means it can be accomplished. However it doesn’t mean that is efficient or optimum. From this point of view, one of our objections to this documentation has stressed out the risks of some pressed terms for the selection process, of the number and quality of the potential candidates.

Why do you think it was chosen the competitive dialogue instead of the international auction as it was initially established?
Both acquisition procedures are settled in Romania and assure competitiveness and objectivity. The first procedure is more adequate for an acquisition of complex services, such as the ones we are referring to.

In what stage is the valuation of the Property Fund?
Almost of an end.

The investment politics established for the future administrator can bring prejudices in the portfolio of the Fund? I mainly report to the possibility of selling stocks.

The investment politics represents a very complex theme and it can be analyzed from many perspectives. I don’t think it can be brought this into discussion, at least initially; it can be brought into discussion as a whole, not on pieces. Briefly, I think that can be mentioned the following: the investment politics of a fund is maybe the first element examined by an investor; it follows the quality of management and its strategy of implementing the investment politics. We can’t discuss about the implications of the sale opportunity, without asking ourselves about the destinations of the sums obtained from this type of sale or about the price of the transaction, the moment etc. In our case, I mention that a discussion on this theme will be opportune after publishing the decision of the Government, when we’ll be able to notice also if:

• it’s taken into account the investment politics approved at the moment by the supervisory commission or not?

• who will have in the future the competence of setting up this politic

• What mechanisms of controlling the administrator and qualities of the provided services will be set up?

Will the current international context direct to a delay of listing the Fund to the Stock Exchange?
In this context is very difficult to forecast. Our intention is to finalize all the necessary procedures, according to the established schedule and assumed by the fund management. I’ve already said: the Property Fund wasn’t in a glass cage, so we hope that the final decision will be taken without ignoring the context.