Foreign investors maintaining robust interest in PPC

PPC, the Public Power Corporation, ranks as one of the Greek public-sector companies that has attracted considerable attention at recent international investment forums and conferences, as typified by a recent event staged in New York City, where the corporation’s Deputy Chief Executive Rania Ekaterinari answered numerous questions by investors on PPC’s privatization.

Greek government officials, at various international events, have also needed to respond to heighetened interest by many foreign investors on the PPC-related sales.

As its first of three steps, PPC’s privatization plan concerns the sale of a 66 percent equity share of subsidiary firm IPTO, Greece’s Independent Power Transmission Operator. According to the plan, it will be followed by the sale of a 30 percent stake in PPC – locally dubbed “Little PPC” – which includes lignite-fired stations, hydropower stations, natural gas-powered stations, mines, as well as consumer contracts. The third stage will involve the sale of a 17 percent equity share in PPC.

The country’s creditor representatives, or troika, are pushing for an acceleration of the privatization procedures at PPC, the Public Power Corporation, and completion within 2015. The troika contends the market will not open up to competition unless PPC’s aforementioned three-step plan is carried out.

Progress on any of these three PPC fronts will depend on the coalition’s survival. Yesterday’s surprise decision by the Prime Minister to swiften procedures for the presidential election will help clear up the political air sooner than had been expected.

HSBC analysts have forecast an increased EBITDA margin for PPC to 20 percent in 2016 from 17 percent in 2014. They also predict net profit will increase by 53 percent in 2015, and a further 50 percent in 2016.

The upbeat profit forecasts have emerged on the back of sturdy PPC results for the nine-month period. The corporation’s EBITDA figure grew by 113.4 million euros, or 16.7 percent, while the EBITDA margin reached 18 percent for the current year’s nine-month period, from 15.2 percent for the equivalent period last year. Also, profit after tax reached 121.8 million euros for this year’s nine-month period, from just 6.7 million euros during the equivalent period in 2013. Pretax profit for this year’s nine-month period totaled 179.5 million euros, from 56.9 million euros during last year’s equivalent period.

HSBC has estimated the value of IPTO at 1.1 billion euros. However, an ongoing international tender for the sale of a 66 percent equity share will be put on hold until the domestic political situation clears up, with binding offers expected to be made should the coalition remain in power.