The Romanian Post Privatisation Fund, one of the largest investment funds in Romania, has sold its stake in the automation and telecom company ISAF Bucharest.
FRPP held 20% in ISAF, which bought its own shares back, after the fund was part of its shareholding structure for five years.
"We entered ISAF in July 1997 and it was about time we sold our stake. The transaction was profitable for both sides. FRPP has doubled, and even more than doubled the money it had invested in the company," Robert Luke, general manager of Ged Capital Development, the company managing FRPP, told Ziarul Financiar.
FRPP originally invested 1.5 million dollars in ISAF, and gained both from selling the shares and from having cashed dividends in the past five years.
After ISAF bought its shares back, capital went down. The company is now held by managers and employees.
"The shareholding structure is almost identical to the way things were before the fund entered the business. We decided to buy back the stake held by FRPP because we have worked very well together in the past few years and we wanted to help them with the exit," says Dan Seceleanu, general manager and shareholder of ISAF.
According to Seceleanu, the money came from the 2002 profit and from last years' gains, which had not been distributed yet.
Such transactions have been very rare on the Romanian market after 1990. Investment funds generally buy shares in a company in order to help it grow and to be able to sell their participation to a strategic investor, together with the other shareholders.
"The fact that the company, namely the management and the employees bought the shares back shows that we have done a great job these years and proves they have confidence in the company's future," Robert Luke says.
ISAF is one of Romania's largest railway automation companies. The company also handles the building and expansion of GSM networks.
ISAF and FRPP jointly hold a company specialising in GSM infrastructure development - Prestar, which used to hold 4% in mobile telephony operator MobiFon. FRPP still owns 28% in Prestar.
ISAF last year posted $13 million in turnover, which is estimated to grow to 14 million dollars in 2003.
FRPP was established in 1997, with the European Bank for Reconstruction and Development (EBRD) having invested the most in the fund.
FRPP owns significant stakes in PCNet (telecoms), Sicomed Bucharest (drugmaker), Vitalgaz (private distributor of natural gas), Iride (industrial park) and Continental (hotel chain).
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