Feb. 26 (Bloomberg) -- Turkey will set up a company that will own toll roads and bridges to pave the way for an initial public offering after the government canceled an auction to sell operational rights because the bids were too low.
The Privatization Administration, the Ankara-based asset sales agency known as OIB, started work with the transportation ministry to form the company for 2,000 kilometers (1,250 miles) of toll roads and two suspension bridges over Istanbul’s Bosporus strait, Finance Minister Mehmet Simsek told reporters in Istanbul today.
“We are at the start of work on how we can sell the assets,” Simsek said. “But our priority is to have an IPO,” he said.
The Finance Ministry said Feb. 22 that the government’s High Board of Privatization, chaired by Prime Minister Recep Tayyip Erdogan, canceled the sale, citing lower-than-expected prices in an auction. A group including Koc Holding AS, private equity firm Gozde Girisim Sermayesi Yatirim Ortakligi AS, and Malaysia’s UEM Group Bhd bid $5.7 billion on Dec. 17 to operate the roads for 25 years.
The winning bid “didn’t satisfy me,” state-run news agency Anatolia quoted Erdogan as saying on a plane from the United Arab Emirates to Ankara yesterday.
A legal entity should be turned into an incorporated company before its owners can apply to the capital markets regulator for IPO permission, according to Turkish law.
The scrapped sale won’t harm this year’s budget because the government already exceeded its target of 4 billion liras ($2.2 billion) in revenue from asset sales when the OIB injected 5.2 billion liras into the treasury at the beginning of the year, Simsek said.
Turkey’s General Directorate of Highways, which operates all of the country’s main roads and Bosporus bridges, earned $542.3 million from 359.8 million vehicles in 2012, up from $534.7 million a year earlier, according to its website.
Simsek also said the asset sales agency is evaluating the bid from Torunlar Gida AS, a food and construction group, to buy Ankara’s gas grid operator, Baskent Gaz Dagitim AS, for $1.16 billion. Erdogan said the gas-grid auction may be canceled, Star reported Feb. 2.
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