Slovenian Budget to Get EU1 Billion From Asset Sales in 2015Boris Cerni and Michael Winfrey
Slovenia should finish selling most of the 15 state-owned companies it has slated for private ownership by year-end, raising about 1 billion euros ($1.06 billion) for the state budget, the chief of the state asset-management body said.
Matej Pirc, president of Slovenian Sovereign Holding d.d., said the sale of the country’s second-largest bank, Nova Kreditna Banka Maribor d.d., may be completed in “a few weeks.” He also expects to get binding bids in the sale of phone operator Telekom Slovenije d.d. during that period.
“We are near the finish line, and we don’t see any huge obstacles,” the 37-year-old said of the Nova KBM sale on Tuesday. “We are doing everything to achieve the best price for this bank.”
Slovenia has trailed other ex-communist European Union members in shedding state assets to raise funds and reduce the government’s role in the economy. The country, which narrowly avoided an international bailout in 2013, began the sale process after injecting 3.2 billion euros into its biggest banks and cleaning 4.9 billion euros in bad loans from their books that built up after the global economic crisis and years of mismanagement under state control.
The government of Prime Minister Miro Cerar is now sticking to a plan formed by his predecessor, Alenka Bratusek, in which the state gave the state asset-management body a mandate to sell the 15 companies. It has already sold four.
“We should finish the majority of sales by year-end,” with the exception of spa and hotel operator Terme Olimia d.d. and tool maker Unior d.d., said Pirc. The sales, which also include air carrier Adria Airways d.d., should bring about 1.5 billion to 2 billion euros in revenue, he said.
Some of the proceeds will go to state companies that directly own the assets, and “around 1 billion euros” will go to the state budget, he said.
Cerar said those funds will be used to reduce Slovenia’s debt, which EU data shows was at about 82 percent of gross domestic product at the end of last year. He also said some funds will be used to boost growth and a small part will go to a state solidarity fund.
Pirc refused to give more details on sales of Telekom and Nova KBM. Last week, Vecer newspaper reported SSH was due to sign a sale contract on the lender with U.S. investment fund Apollo in the coming days, and it would earn more than 200 million euros.
The government is also drawing up a wider strategy in the coming months to decide the fate of more than 90 state-owned companies worth about 13 billion euros, Cerar said in an interview Monday. It should be clear by the end of April which other companies in state hands will be sold off, Finance Minister Dusan Mramor said in Ljubljana, according to Delo newspaper.
The strategy will divide the companies into three categories: strategic assets that the state will keep a controlling stake, those in which it will want to maintain 25 percent plus one share and those that it will sell completely.
“We actually expect this strategy to be adopted as soon as possible,” Pirc said. “There was a lot of interest a few years ago and nothing happened, so I think that investors are waiting. And when the time is right, when they get the information that these companies could be privatized, then there will be a lot of interest.”
The state will probably maintain majority control in infrastructure companies, such as Adriatic port operator Luka Koper and railway company Slovenske Zeleznice d.o.o., Pirc said, and will keep a stake of 25 percent plus one share in the country’s biggest lender, Nova Ljubljanska Banka.
“It will take a few years since it’s Slovenia’s biggest bank,” he said of the NLB sale. “Of course, if we sold the whole bank there would be more interest but it’s the biggest bank, it has operations in ex-Yugoslav states. It will be very interesting for some of the larger banks in Europe.”
The current return on equity of the more than 90 companies the state owns either directly or through other companies is now at 2 percent, and SSH wants to raise that to 6.5 percent by the end of 2017, Pirc said.
“The main goal should be to raise the value of these companies, and also their profitability,” Pirc said. “We also know that the state has limited possibilities to support companies in their development.”
The reluctance of previous governments to sell state assets was mostly tied to “idealogical issues,” Pirc said. Adopting the wider strategy may help shift opinion in a country that has resisted parting with state assets, he said.
“A few governments have tried to adopt such a strategy,” Pirc said. “It’s really important that when we start the process, there are no obstacles and that it doesn’t last too long.”