ISTANBUL – Desperate to find buyers of its assets and holdings to satisfy international lenders, Greece is turning to its neighbor and often-time enemy Turkey to find investors amid fears of a bargain basement fire sale that will bring in far less than the worth of what is for sale or lease. Greek officials met with potential buyers in Turkey, showing off what is for sale or lease in Greece. The Troika of the European Union-International Monetary Fund-European Central Bank (EU-IMF-ECB) has insisted that Greece privatize in a desperate bid to raise as much cash as possible to supplement a first bailout of $152 billion and a second that was just approved for $172 billion. Greek officials met on March 20 with investors from Turkey to showcase a sale of state-run assets, reflecting a reversal in the fortunes of the two regional rivals, as Greece faces possible default and Turkish growth rivals China.
The Troika originally believed Greece could get as much as $66 billion by selling or leasing state-run entities, such as Hellenic Petroleum, the gambling operation OPAP and others, and selling its properties and other assets, including water utilities, ports, gas companies, regional airports, postal services, and tourism facilities. That has been downgraded to only $25 billion, and so far, less than $2.6 billion has been realized as analysts said the potential buyers are waiting for the values to fall even further.
With Turkey’s economy booming and rivaling the growth of China – and Greece still trying to prevent a freefall into economic oblivion, Greek officials are in the difficult position of going almost hat-in-hand to Turkey to sell off properties and assets. Officials of the Greek asset sales agency, investment officials and the Foreign Ministry met with businessmen in Istanbul as the economic ties between the countries have grown closer. The National Bank of Greece’s Turkish unit, Finansbank, is earning more than its parent company.
Greece’s economy is expected to shrink 4.5 percent this year while Turkey’s is projected to grow 9.6 percent. Turkey’s Global Investments Holding is eyeing energy and infrastructure investment opportunities in neighboring Greece, with a priority given to port operations. “As Global Investments Holding, we are looking into investment opportunities in Greece, and our priority will be on ports,” Global board member Adnan Nas told Reuters. “We can complete the investments cheaper than a billion dollars on our own, and we will seek partners for investments more costly than that,” he added. Nas also said the company was evaluating options for energy and infrastructure investments in Greece, which will put it in competition with China, which also wants to boost its investments, particularly in the port of Piraeus where it has major holdings now. Global owns three ports on the Aegean and Mediterranean coasts of Turkey, and has investments in energy, real estate and finance sectors.
“It’s great that Greece is back to its privatization program — the physical proximity of Greece to Turkey will be very important,” Turcas Petrol AS (TRCAS) Chief Executive Batu Aksoy said in an interview at the investor meeting with Greek officials. Greece will auction two seaports by December this year, Panos Protopsaltis, the country’s privatization coordinator, stated at the investors’ meeting. Operational rights will be around 35 years, he said. Greece will establish a regulatory framework to sell the Piraeus and Thessaloniki ports by September, according to an IMF report published March 16.
COOKING WITH GAS
Greece has also asked for expressions of interest in the sale of gas supplier Depa and gas-grid operator Desfa . The sell-off program continues with sports betting company Opap SA (OPAP) and the country’s biggest refiner Hellenic Petroleum SA (ELPE), according to the IMF report. About 90 percent of the assets are in energy and real estate, he said. Greek assets up for sale are not “appropriate for private equity investors” as the government needs long-term investors, he said. The sales “would save Greece about 1 percent of gross domestic product per year in interest,” the IMF said. However, meeting the target “may take considerably more time” than estimated given “weak market conditions, uncertainties about Greece’s near-term prospects and the time needed to prepare the assets,” it added.
The asset sale program will help the ratio of debt to Gross Domestic Product (GDP) in Greece to fall to 116 percent in 2020 from 165 percent in 2011, so long as the nation’s “ambitious” program to overhaul the economy is implemented, according to the European Commission. Turkey, which wants to become a member of the European Union but refuses to admit ships and planes from Cyprus, an EU member, is an attractive target, a country of 74 million people with a raging economy and a bridge to Asia as a secular Muslim country. Turkish companies are marketing aggressively; Turkish Airlines, which is promoting itself and bought the naming rights to the Euroleague, Europe’s professional basketball, while Greece’s national carrier Olympic Airlines shies away from advertising.
Turkey, where the debt to GDP ratio is less than 40 percent, emerged from a banking crisis of its own at the beginning of the last decade. Since then, it’s recapitalized the banks, reduced inflation to 10.4 percent from more than 30 percent in 2002, cut state debt, sold off assets, and opened the industry to international competitors, including National Bank and Athens-based EFG Eurobank Ergasias.
Some funding has already been secured, with two contracts going to Turkish companies. Seven projects are currently open for bidding in Greece; the privatization of the Athens airport is one of them. Businesspeople from both sides discussed potential joint investments at a meeting on March 20, organized by the Foreign Economic Relations Board and the Young Executives and Businessmen’s Association.
FOR SALE: GREECE
Speaking at the event, Selim Egeli, head of the Turkey-Greece Business Council at the Foreign Economic Relations Board, said the meeting represented the development of a mutual understanding between both sides that will add momentum to collaboration. “We are here to learn from our Greek friends about investment opportunities in Greece, as well as get a much clearer picture of what lies inside the country for Turkish entrepreneurs. There are opportunities from sectors as diverse as pharmaceuticals, energy, construction and consultation. I believe today it is the best time to invest in Greece and we have faith that a recovery in Greece will take less time than anticipated.” Egeli said they were ready to extend support to Turkish companies who would like to invest in Greece. “I have heard from more than 15 Turkish entrepreneurs, so far, who have asked for help in Greek markets. Unfortunately we have had problems in the past finding investment consultants in Greece, but today we see them among us. Turkish entrepreneurs should hurry not to miss investment opportunities in Greek markets,” he said.
The chairman of the Invest in Greece Agency, Aristomenis M. Syngros, said that his agency was committed to helping Turkish entrepreneurs invest in Greece, adding that the government has made reforms to improve the investment environment inside Greece, reducing the corporate tax and tweaking other legal issues to ease the bureaucratic procedures hindering foreign investment. Syngros cited tourism, energy, food and beverage and the information and communication technology (ICT) sectors among the major areas where Turkish investors may wish to invest.
Ioannis Patsiavos, the Hellenic Federation of Enterprises (SEV) international relations coordinator, said Greece has begun a process of quickly restructuring and reforming, in order to help competitiveness in it markets recover, the Turkish newspaper Zaman reported. Patsiavos said Turkish companies will play a critical role in this process, adding that Greek private sectors have maintained that dynamism and joint partnerships inside the country are possible. “Greeks are learning from past mistakes and we can establish long-term partnerships as the need for collaboration between the two nations has increased,” added Patsiavos.
“Behind the seeming divergence in their fate lies a great opportunity for Greece and Turkey to enhance cooperation between their two complementary economies,” said Greek Ministry of Foreign Affairs secretary-general for international economic relations and development cooperation, Constantine A. Papadopulos, to describe the current situation. He cited “so much confusion and misinterpretation in the media” as the culprit that has hindered many global players from seeing the real investment opportunities in Greece. “We spent the past two years discussing how to remedy the situation. Now it is time to get back to business and figure out what we can do to attract Turkish investments to Greece,” he noted. One critical fact mentioned by Papadopulos was that there is a still lot of room for Turkish companies in Greek markets. “We are ready to provide Turkish firms with all sorts of support to explore the most profitable investment opportunities,” he noted.