Turkey privatisations: back on track

by David O'Byrne | Financial Times

Turkey’s ambitious privatisation programme scored another significant success Friday with the successful sale of four more of the country’s regional power distribution companies for a total of $3.46bn.

The sale of the four was completed after more than six hours of open bidding between 16 companies.

The two largest power distributor on the auction block – Toroslar EDAS which distributes in the Adana region and AY EDAS which distributes on the Asian side of Istanbul – were sold for $1.7bn and $1.2bn respectively to Enerjisa, a joint venture between Turkey’s Sabanci Holding and Germany’s E.ON.

The auction win comes just four months after E.ON bought out the 50 per cent stake in Enerjisa previously held by Austrian power group Verbund.

Speaking to reporters, Selahattin Hakman, head of Sabanci’s energy arm, said Enerjisa’s ambitions had broadened since the arrival of E.ON.

Enerjisa already owns Baskent EDAS which distributes power in Ankara and now holds close to the 30 per cent maximum share any individual company can hold in the Turkish power distribution sector.

Of the other two regional distributors that were also on auction, Dicle EDAS which distributes in the Diyarbakir region was sold to the Iskaya-Dogu consortium for $387m and Vangolu EDAS which distributes in the Van region was sold to the Turkerler construction group for $118m.

The four distributors were previously sold in tenders held in 2010, but which were later cancelled after the winning bidders failed to make down payments. This was due to problems with securing international financing following the 2008 global financial crisis.

Friday’s sale has been hailed as particularly successful as three of three four distributors were sold for prices higher than achieved in 2010 when Toroslar was sold for $2.1bn, Dicle, $228m and Vangolu $100.1m. Only AY was sold for a higher price of $1.8bn.

Moreover the higher bid prices realised for Dicle and Vangolu, which distribute in predominantly Kurdish regions of south east Turkey are being hailed as a sign of market confidence in the government’s ongoing peace initiative.

The successful conclusion of the auction comes only days after Turkey’s high privatization council (OYK) approved the sale of the Ankara gas distribution company Baskent Gaz to Torunlar Gida for $1.162bn and the sale of three other regional power distributors Bogazici EDAS, Akdeniz EDAS, Gediz EDAS and Aras EDAS for a total of $3.9bn.

It should also go some ways to take the sting out of the criticisms that have been lobbed at Turkey’s privatisation efforts after the government cancelled an auction for a tender to operate some of the nation’s most travelled highways and bridges because the $5.7bn winning bid was deemed to be too low.

While payment for the nines still needs to be completed, few anticipate a repeat of the problems experienced in 2010 when the global financial crisis made funding hard to secure. Instead, expectation is for 2013 to be a record year for Turkey’s privatization programme.

Together the nine sales bring revenue from energy sales alone over the first three months of the year to $8.49bn; more than the $7.46bn combined revenue of the whole of the past three years.

Source:http://blogs.ft.com/beyond-brics/2013/03/15/turkey-privatisations-back-on-track/#axzz2O11QrwLo