BELGRADE (Serbia), December 23 (SeeNews) – Serbia’s Citadel Asset Management is merging its Triumph investment fund into local peer KD Exclusive and expects assets to grow next year as confidence slowly returns to equity markets, Citadel's director Pavle Kavran said.
It is the first such merger underway in Serbia since the global economic downturn seriously damaged local fund industry. The merger will be wrapped up early next year, Kavran told SeeNews.
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Citadel Asset Management wants KD Exclusive's investors to carry on as investors in Triumph as fund manager KD Investments is closing down, Kavran said.
He added that other fund managing firms were likely to follow KD Investments, which is the Serbian unit of Slovenian financial services provider KD Group.
Three funds have been taken off the register of investment funds in Serbia so far this year, data from the Securities Commission showed. Nineteen remain on the list – two closed-end funds, 15 open-end ones and two yet to be launched.
Fund industry legislation took effect in Serbia in December 2006 and the first fund started operations in May 2007. In this sector, Serbia trails far behind other former Yugoslav republics like Slovenia and Croatia, and also lags behind its neighbours Romania and Bulgaria.
Triumph had 56.29 million dinars ($830,300/583,200 euro) in assets under management as of Monday, while KD Exclusive managed 13.94 million dinars, data from the companies' websites showed.
Kavran expects Citadel's assets to grow next year, both through the bourse and through new subscriptions.
“There will be growth but it depends on too many factors, so it will not be serious to commit oneself to exact forecasts.”
According to Kavran, a market recovery will happen, though some firms might never be able to enjoy it.
“I don’t expect it [the downturn] will last too long. In the financial sector, a year, two or three are not a long period.”
“Investors’ confidence in the capital market is slowly returning. I think we touched some bottom and saw the worst of the crisis.”
The benchmark share index of the Belgrade bourse, BELEX15, has risen over 13% since the beginning of the year. It dropped 76% last year, inflicting severe damage not only to the fund industry but also to many brokerage houses which had to close down for being unable to cover daily costs.
Now, with the anxiety surrounding the crisis settling, investors willing to put their cash into high-risk assets are slowly coming back, Kavran said.
“I think this process will intensify next year and in 2011. It won’t happen overnight.”
Kavran said the crisis has not changed Citadel's investment policy.
“We continue to look for attractive companies, which are the best and most profitable in their sectors. Banks, food, and energy – this is what we like most and in such companies we try to invest long-term.”
Citadel Asset Management is investing mostly in domestic companies. It is also investing abroad, mainly in the region.
The fund manager runs open-end funds Triumph, Focus Premium and Focus Novcani, and closed-end fund Triumph Elite.
Citadel Investment Services Group was founded in November 2001 in Belgrade. It comprises Citadel Asset Management, Citadel Financial Advisory, Citadel Securities and Citadel Real Estate.
(1 euro=96.5158 dinars)