* Fondul aims to reduce its 30 percent discount
* Fund will encourage companies to list, or cut holdings
* Five power distribution companies in the firing line
By Luiza Ilie
BUCHAREST, Jan 21 (Reuters) - Romanian fund Fondul Proprietatea plans to cut the number of unlisted companies in its portfolio this year to narrow the discount between the fund’s net asset value and stock price, its manager said on Wednesday.
The fund, managed by Franklin Templeton, will sell its holdings in unlisted companies or encourage them to list on the bourse, fund manager Grzegorz Konieczny said in an interview.
The 2.95 billion euro ($3.4 billion) restitution fund, set up to compensate Romanians whose assets were seized under communism, holds minority stakes in a slew of mostly state-owned companies.
But nearly half of its holdings are in unlisted firms, making it difficult to assess their worth and contributing to the fund’s stock price discount, which is 30 percent below its net asset value.
The fund will sell its 12-24 percent holdings in five power distribution companies if Italy’s Enel sells its controlling stakes this year, Konieczny said.
He declined to name prospective Enel asset buyers, but said the company should request binding bids from buyers within the next two months.
“If it happens then it creates exit opportunities for us,” he said. Enel announced plans last year to sell its Romanian power distribution assets.
Konieczny said planned initial public offerings in state power producers Hidroelectrica and Oltenia, in which Fondul holds minority stakes, were unlikely to happen this year after successive delays.
Franklin Templeton has encouraged successive governments in the European Union’s second poorest country to list state firms in which it holds stakes, including Bucharest Airports, salt monopoly Salrom, and Constanta Port in the south-east.
“We think these three companies are ready and very good candidates for the market because they would also offer diversification for investors,” Konieczny said.
Fondul has already cut the number of unlisted companies in its portfolio to 38. It has also been buying back its shares, reducing the discount from 55.7 percent in 2011.
It financed the buy-backs partly by selling small stakes in listed utilities like oil and gas group Petrom, gas and power grid operators Transgaz and Transelectrica and gas producer Romgaz.
Konieczny, who expects Romania’s economy to grow at least 3 percent this year, said emerging Europe was looking very attractive to investors.
“I think stability, valuations, dividend yield and low interest rates: that is what’s attractive, and Romania more so. If you exclude the banks, the average dividend yield for listed companies is more than 6 percent.” ($1 = 0.8617 euros) (Reporting by Luiza Ilie; Editing by Sam Wilkin)