Market to be flooded with cheap Fondul Proprietatea shares as of Monday

Almost 1.5 billion Fondul Proprietatea (FP) shares, accounting for 10.7% in the capital of the fund might be transferred by the Finance Ministry to those people who hold compensation deeds and have chosen to have them converted into shares at an average price of 0.6176 lei/share, according to the data supplied by the National Authority for Property Restitution (ANRP).

Brokers say the availability of such deeds on the market will put pressure on the price of FP shares, which have been following a downward trend since floatation. The FP shares have gone down from 0.61 lei to 0.579 lei in the past month.

The explanation is that those that will get shares from May 2 to 6 will get them at a price equal to the average quote of the first sixty trading sessions of FP shares on the Bourse (from January 25 to April 19), 0.6176 lei, unlike those who got shares before the listing, at a price of 1 leu. Therefore they will be much more tempted to sell at the current prices.

As of May 9, the conversion of the compensation deeds will be done at the average price of the last sixty trading sessions displayed at the Bucharest Stock Exchange every day.

"From January 11, 2011 through April 15, 2011 we registered 1,284 requests opting for shares, with the number of the shares to be issued after the expiry of the suspension period, that is as of May 2, 2011, standing at 1,483,179,773. We would like to add that in calculating this figure we used the weighted average price of 0.6176 lei/share, as supplied by the Bucharest Stock Exchange on April 19, 2011," reveals the information supplied to ZF by ANRP.