June 23, 2015

GDR First on Closed-end Investment Fund: BNY Mellon’s Depositary Receipt team heralds significant milestone in Romania

Fondul Proprietatea joins London Stock Exchange Specialist Fund Market

Fondul Proprietatea joins London Stock Exchange’s Specialist Fund Market


BNY Mellon is already synonymous with innovation and global depositary receipts (GDRs), and it has marked another significant milestone: its first GDR program on a closed-end investment fund. The company was selected as depositary bank by Fondul Proprietatea (the “Fund”) for its admission to the Specialist Fund Market of the London Stock Exchange (LSE) on April 29, 2015.

Fondul Proprietatea’s portfolio includes 51 companies with assets valued at €2.96 billion1 and its objective is to maximise returns and per-share capital appreciation via investments mainly in Romanian equities. The Fund is a joint stock company operating as a closed-end investment company and the sole administrator of the Fund is Franklin Templeton Investment Management Limited United Kingdom, Bucharest Branch.

“We are convinced that the secondary listing of the Fund on the LSE will increase the visibility of the Romanian capital market on the international scene,” said Dr Mark Mobius, Executive Chairman of Templeton Emerging Markets Group. “The Fund will facilitate access to a broader base of foreign investors and will act as a catalyst towards unveiling Romania’s many other investment opportunities.”

This is also the first time an issuer has sought admission to the Specialist Fund Market of the London Stock Exchange through GDRs.  

Xavier Rolet, CEO, London Stock Exchange Group, says: “As one of the most significant investment funds in Europe, the success of the listing is a reflection of the strength of the Romanian economy, which has one of the highest growth rates in the EU. This is a significant milestone which will serve to further enhance the fund’s visibility and access to global capital as well as highlighting Romania’s ability to attract the world’s largest investors without compromising the development of a domestic shareholder base.”

GDRs allow companies to make their securities available outside their home markets and allow investors trading in the United Kingdom and elsewhere to invest in companies on a more global basis. BNY Mellon is the largest depositary bank in the world with a market share of 60%2 and the only one currently operating in Romania.

“Fondul Proprietatea has already seen very significant demand for its stock in GDR form,” said Christopher M. Kearns, CEO of BNY Mellon's Depositary Receipts business. “This reflects strong investor demand and is another example of how GDRs have helped foreign investors access emerging markets.”

Fondul Proprietatea is the third Romanian company to list on the LSE. “We started discussions with the Romanian financial regulator several years ago about how to give foreign investors the opportunity to access the Romanian stock market via GDRs,” adds Kearns. “As part of the Romanian government’s plans to privatise major state entities, it became apparent that demand and desired valuation levels were more likely to be secured through an international offering, in addition to the local offering on the Bucharest Stock Exchange. Our engagement with the Romanian Financial Supervisory Authority (FSA) helped us to understand how the GDR structure could accommodate the regulatory requirements of an international offering across multiple markets.”

Fondul Proprietatea’s admission to the Specialist Fund Market of the LSE is yet another milestone in the innovation and evolution of GDRs and Romania’s capital market.

1 As at 30 April 2015
2 http://www.adrbnymellon.com/dr_why.jsp