IPTO candidates have until mid-October to submit offers

Italy’s Terna, France’s RTE and China’s State Grid, the three firms through to the second stage of an international tender staged by main power utility PPC for a 24 percent stake in its wholly owned subsidiary IPTO, Greece’s power grid operator, have a month and a half to assess technical, economic amd legal data and submit their binding bids. The prospective bidders have now been granted access to IPTO’s virtual data room

Although a deadline has yet to be fixed, sources informed it will be set for October 15 so that a preferred bidder may be announced by October 31, as required by the bailout agreement. However, a slight extension of a few days could be offered if the bids are deemed to be too low, as is often the case in tenders, and PPC ends up requesting improved bids.

It is still too early to make any predictions about the amounts the strategic investors may offer. At the end of 2014, while a tender offering 66 percent of IPTO was in progress after being launched by the country’s previous conservative New Democracy-led coalition, it had been leaked that IPTO’s total equity value was valued at 921 million euros. Based on this estimate, a 24 percent stake of the operator would be worth 221 milion euros, representing the lowest acceptable offer.

Following negotiations with the country’s lenders, the current Greek government relaunched the IPTO tender with new terms entailing the transfer of a majority 51 percent stake from PPC to the Greek State, 24 percent to a strategic investor and the remaining 25 percent to investors through the bourse. However, if this attempt fails, or its overall progress is deemed unsatisfactory, the government will be forced to sell IPTO in its entirety.

Besides gathering IPTO-related information through the virtual data room, the three candidates also have the right to request details from the tender’s consulant, PwC, and the operator’s management, which is preparing to make its own presentations to the bidders, separately, over a series of daily meetings in just over a week.

IPTO’s management is scheduled to meet with Terna officials on September 7, RTE officials the following day, and State Grid officials on September 9. In preparation, the bidders will each meet with the tender’s consultant a day prior to these respective presentations. Bidding company officials will visit IPTO facilities following the IPTO management presentations.

It is estimated that a 24 percent share of IPTO promises a yield of between 7.5 and eight percent to investors over the next three years.