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 and restrictions

Investments limits of FP are the following:

up to 10% of its assets invested in listed shares or money market instruments issued by one single issuer, except of the government securities. The 10% limit may be raised to maximum 40% provided that the total value of the securities held by Fondul Proprietatea in each of the issuers in which it has holdings of up to 40% does not exceed in any case 80% of the total value of its assets;
up to 20% of its assets invested in unlisted securities or money market instruments except of the government securities and bonds and other cases permitted by law including all holdings in shares received from Romanian State on the basis of the legislation in force at that time*;
up to 10% of assets invested in bank deposits with one single bank;
up to 10% of assets invested in financial instruments issued by entities belonging to the same group of companies;
up to 10% of assets invested in UCITS units or other collective investment scheme units;
exposure to the counterparty risk in a transaction with derivatives traded out of the regulated markets may not exceed 10% of assets, irrespective of the counterparty of the transaction, while the global exposure of derivatives may not exceed 15% of the total allocation of net assets.

*Where FP acquires further participations in the same companies in which it received holdings from the Romanian State according to the law in force at that time, the general investment limits shall apply to the newly acquired securities.

For the calculation of the ownership limit for securities not admitted to trade, shall be excluded from the value of assets not admitted to trade the value of securities not admitted to trade owed from the Romanian State on the basis of the legislation in force at that time.

The exercise by FP of its preference rights in connection with shares received by FP from the Romanian State on the basis of the legislation in force at that time does not trigger excess of the applicable investment limits.

Investments