Romania is preparing for a new round of big privatisations in the months ahead, as government looks to reduce the state’s role in the economy and add depth to the country’s capital markets, the CEO of the Bucharest Stock Exchange (BSE) told Emerging Markets.
Ludwik Sobolewski has also revived an old ambition to form a pan-central and eastern Europe stock exchange, with the bourses of Warsaw, Vienna and Bucharest at its heart.
After a “kind of break” in the privatisation process over the past 12 months, following domestic power supplier Electrica’s $604m initial stock sale last June, the BSE was preparing for another rush of listings
First up, he said, would be the twice-postponed €500m ($562m) IPO of state power producer Hidroelectrica, set to be completed late this year or in early 2016.
After that will come a raft of transactions across the economic spectrum, including the IPOs of state lender CEC Bank, the Port of Constanta, energy provider CE Oltenia, Bucharest Airport, and the postal service Posta Romana which, Sobolewski said, “would expand massively with better financing, and could look to expand into financial services”.
The Romanian government would also look to divest its 40% stake in Telekom Romania in the next year or two, he added, most likely through a stock listing.
The creation of a powerful and unified regional bourse was also inevitable despite several false starts over recent years, the BSE chief added. “It may take a few more years to complete but it will happen — of that I have no doubt,” he said.
“Possibly the impetus will come from a [leading global bourse] entering into talks with a major exchange. Its rivals would never let that happen.” Not all regional bourses would be included as, he noted “brutally speaking, some of them have no chance to develop”.
Too Russian
Sobolewski said the Warsaw Stock Exchange, which he used to run, had become “a little bit less sexy” in the eyes of investors since Poland’s pension funds were nationalised last year. But in time, the stock exchanges of Warsaw and Vienna, along with a few rising stars, including Bucharest, “will come together”, he said.
Bucharest still has serious challenges ahead as the country remains hobbled by its past and its neighbours. “In the eyes of many investors, Romania is too similar to the likes of Russia and Ukraine,” admitted Sobolewski.
Another major challenge was convincing the MSCI and other major index providers to reclassify Romania as an emerging market, rather than a frontier state.
“It would be bizarre if in four or five years’ time Romania was a part of the European Union, a very reliable Nato member, boasting growth of 3% and a steady deficit-reduction campaign, yet it was still locked in a box marked ‘frontier market’,” he said.