The first day of Hidroelectrica’s listing, a historic event for the capital market in Romania, was marked in BNR by the organization of the event, which facilitated the presence of important people from the political sphere, BNR, ASF, diplomatic sphere and financial markets.

The presence of so many representatives of public administration bodies was all the more remarkable because we are, in fact, talking about the completion of a deal between exclusively private entities: Fondul Proprietatea (FP) and the investors who bought.

Looking at the speeches, one can notice a common denominator that refers to the historic jump of the stock exchange (BVB) or the capital market in Romania. The feeling that we are putting effect before cause prompts me to make a comment that begins with a metaphor whose whooping cough is implied. Is building a great market in the center of Pyongyang enough to eliminate hunger in North Korea? Of course not. In fact, the demand will be met only by an increase in the supply of food. The demand for capital in Romania will also be solved only by increasing the supply of capital. You have space for nothing if you don’t have two participants in any transaction.

There are opinions that the initial public offering of Hidroelectrica should have taken place many years ago. Q: Would the result be the same as this month? And if not, what difference does it make? After all, BVB and brokerage firms were present in Romania from that time, public institutions were also present, Hidro was firmly on its feet after bankruptcy, so it was attractive. And then, what spectacular change allowed this capital market to leap into a new league? And there is only one answer: the doubling of the assets of private pension funds over the past 4 years, which today have reached more than 100 billion lei.

Yes, this system whose usefulness and raison d’être has been periodically questioned since its inception in various eras culminating in 2018, this system whose contributions have turned out to be much lower than originally planned, and a system that whenever the financial markets are falling, blamed for losing people’s money, even though it has averaged over 7% a year since its inception (well above the rate of inflation), this scheme, which although started with comparisons to FNI, will reach cumulative payouts of around 2 billion lei in 2023.

Without the 50 billion lei accumulated over the last 4 years, the pension funds would not have the necessary assets in Fondul Proprietatea to tip the scales in favor of an exclusive listing in Bucharest against Franklin Templeton’s dual listing proposal. Because you know, apart from good intentions and plans, such decisions are made only by the votes of shareholders, the only ones that really matter.

Without the 50 billion lei accumulated over the past years by pension funds, we would not have had the largest listing in Europe, nor the third in the world for the current year, the size of the sold package of shares should have been smaller. And to those who consider such a statement exaggerated, I would like to remind that according to press estimates, pension funds would buy almost half of the offered shares of Hidro.

In this context, whether someone likes it or not, the “golden” future of the Romanian capital market, which was often mentioned on the occasion of the BNR events, is closely related to the future of the private pension system in Romania, where the largest accumulations of national capital and the largest institutional investors.

The healthiest way to implement “economic patronage” is not to preserve state holdings, but to stimulate the accumulation of domestic capital (and) in the private pension system in order to compete equally with foreign ones in the acquisition of Romanian assets. Hidroelectrica’s experience in listing has convincingly confirmed this.

N. Red: The text also appeared on the author’s blog. Read and comment on Radu Crăciun’s blog