Bloomberg News

Franklin Templeton Interested in Buying Romanian Energy Assets

November 25, 2011

Nov. 24 (Bloomberg) -- Franklin Templeton Investments is interested in buying state-owned energy assets in Romania, providing the authorities reform regulation, said Mark Mobius, the fund’s chairman.

The Balkan nation, which plans to sell holdings in energy companies including Transelectrica SA, Transgaz SA and hydropower operator Hidroelectrica SA, must also secure its funding because selling debt on the international markets will become more expensive, Mobius said.

“With what is happening in Europe its going to be extremely difficult for Romania to sell bonds at a reasonable rate and that’s why they have to start looking in their own country where the profits can be made by privatizing state-owned companies,” Mobius said in an interview in Bucharest. “We are interested to buy but they have to reform the regulatory structure so it becomes profitable to invest.”

Romania has pledged to the International Monetary Fund and the European Union that it will sell minority interests in its utilities and majority stakes in unprofitable state-owned companies, like Oltchim SA, to fund infrastructure projects. The government has also promised to lower the country’s budget deficit to 1.9 percent of gross domestic product next year, from an anticipated 4.4 percent this year.

The country postponed the sale of a 15 percent stake in its power-grid operator Transelectrica to early next year, after initially setting a deadline of the end of 2011. The government selected Erste Group Bank AG’s Banca Comerciala Romana SA, Romania’s largest bank, Intercapital Invest SA and Swiss Capital SA to manage the sale.

A worsening of the Europe’s sovereign-debt crisis led to the failed attempt to sell 9.8 percent of OMV Petrom SA in July. Polish and Ukrainian governments have also delayed sales this year. Prime Minister Emil Boc’s government plans to revive the sale in the first half of next year, the Economy Ministry said.

Romania also aims to sell majority stakes in newly-formed energy companies Oltenia SA and Hunedoara SA, which include coal-fired plants and some unprofitable coal mines.

--Editors: Tim Farrand, Peter Woodifield

To contact the reporters on this story: Irina Savu in Bucharest at isavu@bloomberg.net; Andra Timu in Bucharest at atimu@bloomberg.net

To contact the editor responsible for this story: James M. Gomez at jagomez@bloomberg.net


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