BRE/Cresco bring third fund into fold
The move to bring Fortuna under BRE/Cresco signaled potential for further consolidation in the number of groups that manage NIFs, slicing the number of major players to less than half a dozen, analysts said.
"It would be logical for the management firms to choose the best funds and begin to consolidate them," said Paweł Sobkiewicz, head of issue department at BGK brokerage. "Right now, however, we do not know who will do that or how it will be done."
Fifteen NIFs were set up in the mid-1990s to manage more than 500 companies in the nation's mass privatization program. The current drive to consolidate the management of those funds under a handful of teams is being fueled by major shareholders, which have major stakes in several funds, analysts said.
"We can not talk about the NIF program any more," said Jerzy Bujko, president of Magna Polonia. "Each fund is a separate publicly traded company and has to be viewed separately."
Last week's approval adds Fortuna to BRE/Cresco's list of funds under management. BRE/Cresco is also the fund manager for NIF I and the NIF V "Victoria" fund. A group of investors working with Maciej Radziwiłł, who runs Cresco Management, has been very active in trying to streamline management, said Sobkiewicz of BGK brokerage.
Cresco Management is the co-owner of BRE/Cresco along with BRE Bank. Radziwiłł, as president of Cresco Financial Advisors, represents a number of overseas institutional investors, such as Credit Suisse First Boston, Merrill Lynch, Poland Opportunity Fund and Everest Capital.
The Radziwiłł group, named after this web of consultants and investors, has significant influence over other NIFs, such as Zachodni, Foksal and Kazimierz Wielki, which are managed directly by Everest Capital Polska.
Other potential consolidators of NIFs include insurer Powszechny Zakład Ubezpieczeń (PZU), NIF Fund Holdings, Bank Pekao and to a lesser extent Wielkopolski Bank Kredytowy (WBK), which is in a strategic agreement with Ireland's AIB Bank, Sobkiewicz said.
Earlier this year, the state treasury gave up its controlling stakes in funds, paving the way for significant changes in NIF supervisory and management boards in recent months, analysts said. But the shareholder-driven consolidation is not across the board.
"In our case, the shareholder structure is different," said Piotr Oskroba, director general at AIB WBK Fund Management, which runs the Magna Polonia fund.
Magna Polonia's dominant shareholder has no shares in the management firm, Oskroba said. Copernicus Investments and NIF Fund Holdings have nearly a 30% stake in Magna Polonia. "Time will show whether one firm managing several funds could offer a higher quality of management," Oskroba said.
The current consolidation phase has coincided with up to a 40% drop in fees that management teams annually charge NIFs to restructure individual companies and manage assets in a fund's portfolio. Management fees generally run ECU 1.6 million ($1.7 million) annually, compared to NIF No.1's $3 million management fee of several years ago. In Magna Polonia, shareholders approved June 30 to lower its annual fund management payment 15% to $2.35 million from $2.8 million.
"It would be logical for the management firms to choose the best funds and begin to consolidate them," said Paweł Sobkiewicz, head of issue department at BGK brokerage. "Right now, however, we do not know who will do that or how it will be done."
Fifteen NIFs were set up in the mid-1990s to manage more than 500 companies in the nation's mass privatization program. The current drive to consolidate the management of those funds under a handful of teams is being fueled by major shareholders, which have major stakes in several funds, analysts said.
"We can not talk about the NIF program any more," said Jerzy Bujko, president of Magna Polonia. "Each fund is a separate publicly traded company and has to be viewed separately."
Last week's approval adds Fortuna to BRE/Cresco's list of funds under management. BRE/Cresco is also the fund manager for NIF I and the NIF V "Victoria" fund. A group of investors working with Maciej Radziwiłł, who runs Cresco Management, has been very active in trying to streamline management, said Sobkiewicz of BGK brokerage.
Cresco Management is the co-owner of BRE/Cresco along with BRE Bank. Radziwiłł, as president of Cresco Financial Advisors, represents a number of overseas institutional investors, such as Credit Suisse First Boston, Merrill Lynch, Poland Opportunity Fund and Everest Capital.
The Radziwiłł group, named after this web of consultants and investors, has significant influence over other NIFs, such as Zachodni, Foksal and Kazimierz Wielki, which are managed directly by Everest Capital Polska.
Other potential consolidators of NIFs include insurer Powszechny Zakład Ubezpieczeń (PZU), NIF Fund Holdings, Bank Pekao and to a lesser extent Wielkopolski Bank Kredytowy (WBK), which is in a strategic agreement with Ireland's AIB Bank, Sobkiewicz said.
Earlier this year, the state treasury gave up its controlling stakes in funds, paving the way for significant changes in NIF supervisory and management boards in recent months, analysts said. But the shareholder-driven consolidation is not across the board.
"In our case, the shareholder structure is different," said Piotr Oskroba, director general at AIB WBK Fund Management, which runs the Magna Polonia fund.
Magna Polonia's dominant shareholder has no shares in the management firm, Oskroba said. Copernicus Investments and NIF Fund Holdings have nearly a 30% stake in Magna Polonia. "Time will show whether one firm managing several funds could offer a higher quality of management," Oskroba said.
The current consolidation phase has coincided with up to a 40% drop in fees that management teams annually charge NIFs to restructure individual companies and manage assets in a fund's portfolio. Management fees generally run ECU 1.6 million ($1.7 million) annually, compared to NIF No.1's $3 million management fee of several years ago. In Magna Polonia, shareholders approved June 30 to lower its annual fund management payment 15% to $2.35 million from $2.8 million.
