Four power operators express non-binding interest in IPTO

The first stage of a bailout-required international tender offering a 24 percent share of IPTO, the power grid operator, has been completed with four bidders submitting non-binding expressions of interest, PPC, Greece’s main power utility and parent company of IPTO, has announced.

PPC, controlled by the Greek State with a 51.12 stake, will now assess the technical and economic credentials of bidders to decide whether they qualify for the next stage.

Four companies submitted expressions of interest, these being Italy’s Terna, France’s RTE, an EdF subsidiary, and two Chinese companies, State Grid of China Corporation (SGCC), and China Southern Power Grid.

Second-round qualifiers will be provided IPTO’s financial details and time to conduct due diligence procedures before they submit their binding offers.

HSBC Bank, Citigroup Global Markets Ltd and NBG Securities are acting as financial advisors, while Rokas is PPC’s legal advisor for the IPTO tender.

PPC was granted permission to stage the IPTO at a general shareholders meeting on July 11. The deadline for non-binding expressions of interest expired yesterday.

A prefered bidder for the IPTO tender will need to be selected by October 31 and the procedure completed by February 28, 2017. Should Greece’s international creditors deem that the IPTO tender is not making satisfactory progress, then a process to full privatize IPTO will be triggered.

Besides the 24 percent offered to strategic investors, the current IPTO privatization plan also entails transferring 51 percent to the Greek State and offering the other 25 percent to investors through the bourse.

 

Highest bidder to secure IPTO’s 24% in fast-moving tender

The assessment of technical and economic credentials submitted by electricity operators interested in acquiring a 24 percent share of IPTO, Greece’s power grid operator, through an international tender whose deadline for first-round non-binding expressions of interest expired yesterday, is expected to be completed swiftly, by the second week of August.

Qualifiers will then be given time to conduct due diligence procedures before they submit their binding offers. The faster the first-round non-binding stage is completed, the more time qualifiers will have for due diligence.

Facing a tight schedule for the bailout-required international tender, the main power utility PPC, controlled by the Greek State with a 51.12 stake, launched the procedure for IPTO, currently a wholly owned PPC subsidiary, just over a fortnight ago.

According to energypress sources, once the strategic investors are through to the tender’s next stage the only criterion at play will be the price they are willing to offer for IPTO’s 24 percent.

All bids, whether coming from companies with EU or non-EU roots, will be treated equally during the second stage.

Four electricity network operators have expressed non-binding expressions of interest in IPTO, PPC has announced, these being Italy’s Terna, France’s RTE, an EdF subsidiary, and two Chinese companies, State Grid of China Corporation (SGCC), and China Southern Power Grid.

At this stage, it is believed that SGCC, which already holds a 25 percent stake in Portuguese energy company REN, will lead the pack of bidders if it decides to push for IPTO’s 24 percent. SGCC had also taken part in a previous attempt to sell 66 percent of IPTO, staged a couple of years ago by Greece’s preceding conservative New Democracy party-led coalition.

At the time, IPTO’s 66 percent was evaluated at just over 900 million euros, while SGCC was reportedly preparing to offer an amount of between 600 million and 800 million euros. Based on these calculations, a 24 percent stake of IPTO is worth 216 million euros. SGCC can be expected to easily make an offer of over 300 million euros, the amount Italy’s Terna had decided to offer for 66 percent of IPTO during the previous sale attempt for the operator.

Conditions have changed over the past two years. SGCC has since become indirectly linked with Terna after acquiring a stake in CDP Reti, an Italian holding company that maintains an equity share in Terna. Also, the Italian banking sector has clearly deteriorated during this period.

France’s RTE is definitely capable of submitting a competitive offer that could rival or outdo any Chinese bid.

China Southern Power Grid, the second Chinese firm to declare a non-binding interest in IPTO, will most probably not take part in the tender’s next stage as, unlike SGCC, it does not have a European presence. If this remains so, China Southern Power Grid will not meet the tender’s criteria. The IPTO tender’s terms state that bidders must be certified European operators. China Southern Power Grid could seek a European partner, but this is considered unlikely.

The two Chinese firms are also currently participating in an Australian tender offering a share of the country’s power grid.

A prefered bidder for the IPTO tender will need to be selected by October 31 and the procedure completed by February 28, 2017. If Greece’s international creditors deem that the IPTO tender is not making satisfactory progress, then a process to full privatize IPTO will be triggered.

Besides the 24 percent offered to strategic investors, the current IPTO privatization plan also entails keeping 51 percent for the Greek State and offering the other 25 percent to investors through the bourse.