Friday 22 September 2017

Investors don't believe in state bid to raise €3bn from asset sales

Thomas Molloy

Thomas Molloy

Other agencies on table if troika target not met

€1bn

Amount sought by State for infrastructure fund

FOREIGN investors are struggling to believe that the Government's privatisation plans will raise the €3bn demanded by the troika, the Government has admitted in a report.

"Many investors consider that the €3bn commitment by the Government in relation to asset sales will not be met by the announced transactions," the Government's Action Plan for Jobs said yesterday.

"A key issue to attract international capital is to give confidence that asset will be available for purchase by investors," it adds.

The troika has told the Government to sell off state assets to raise cash. The Government would have to sell more assets if it fails to realise €3bn from its current plans to sell off its remaining stake in Aer Lingus, along with stakes in Bord Gais Energy and the ESB.

Governments everywhere are busy selling assets, leading to a glut of energy company sales and making it difficult to value assets ahead of any sale.

The NTMA, which is managing the sales on behalf of the State, has not decided yet whether to sell shares on the stock exchange or to sell a stake to a strategic investor.

Bord Gais chief executive John Mullins said recently that the UK's "Big Six" power companies are the most likely bidders when Bord Gais assets come up for sale next year, but China and the Middle East will also be targeted for bidders.

Mr Mullins added he is "confident" that UK utilities are looking at the Bord Gais assets because of the increasingly interconnected energy markets of Britain and Ireland.

The action plan update, released yesterday, also suggests slow progress with the Government's plan to create an infrastructure fund with help from foreign investors.

The Government first said in September 2011 that it would use cash from private investors and the national pension reserve fund to invest in areas of strategic significance for the Irish economy.

Finance Minister Michael Noonan told the Dail in June that the fund is seeking up to €1bn from institutional investors in Ireland and overseas to invest in infrastructure assets including assets designated for disposal.

Clarity

Yesterday's report said the Government is still trying to market the fund to foreign investors but adds that the European debt crisis and the lack of clarity about asset values are hampering the sale.

One investor from the Middle East "has indicated a willingness to make a relatively small commitment" to the fund but there is no mention of any firm commitments.

The new fund still requires formalisation from the National Pension Reserve Fund, the action plan adds. "Work is ongoing," it says.

Development of contacts with foreign sovereign wealth funds and potential investors is also "ongoing" the report says.

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