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Newsletter December 2011

INVESTMENT NEWS

The Privatisation Programme: Largest in the World

Greece, as part of the medium term fiscal strategy agreed with its partners, has committed to transfer trading assets from the public to the private sector.

The government has set up the Hellenic Republic Asset Development Fund, whose sole mandate is to facilitate this move. This marks a substantial departure from past practices and puts the privatisation programme in a clear business context.

The Hellenic Republic privatisation programme is the largest declared divestement  program in the world (50 billion Euros).

Its success depends primarily on international market conditions and of course Greece’s degree of preparedness. Real Estate and infrastructure (including energy) account for the bulk (~85%) of the expected proceeds.
The Fund was set up on 1st August 2011, is now fully operational and has completed its first privatisations:

• The extension of the gaming license to the gaming company OPAP,
• The award of a new VLT license to OPAP
• The extension of mobile telephony licenses

At the same time the Fund is currently working on:
• The extension of the Athens International Airport concession and the sale of 30% of its shares
• The sale of the State Lotteries license

The Hellenic Republic Privatisation Programme as a whole represents a major call for attracting infrastructure and energy and real estate investment to Greece.

Greece has obvious advantages which will improve returns over benchmarks on infrastructure and land development projects:
• Greece is a significant destination in the global tourism industry
• Greece is a crossroad between East, coming through Turkey, and the West in transport and energy terms
• Greece is a natural entry point to the Balkans and Central Europe for global trade flowing from the East
• Greece has a high population concentration in few cities and high per capital income.

There are major opportunities for new projects such as HELLINIKON, which is the largest urban regeneration project in the world currently underway. There are also opportunities for serial tourism developments, which will upgrade the product offered and for letting land out for renewable energy investments. Investments in resorts, golf courses and marinas will inevitably go hand in hand with investments in hotels and summer houses. This will reposition Greece in the global tourism market by adding a strong service and excitement component to the natural gifts of the country—sun and sea. Investments like these have long lead times and will be fully supported from the outset by the Hellenic Republic. As long as there is a business agreement in place, obtaining permits and licenses for development and operation will be fast and will be taken care by the Fund.

Immediate Objectives of Real Estate Asset Programme
 Return of the country to the market through the exploitation of real estate assets
 Significant contribution to state revenues, totalling about 25 billion Euros by 2015
 Attraction of international capital investment interest of up to 100 billion Euros
 Reinforcement of the strategic sectors of the Greek economy (tourism; energy; combined transportation)
• Modernisation of the institutional framework and introduction of new methods and implementation tools (licensing, financing, operation)
• Increase of employment in the short run (during implementation) and in the long run (during operation)
• Regional development and improvement of the infrastructure (transportation, health, energy, environment and services) through the rational exploitation of national and EC resources
• Strengthening of construction activity

A series of privatisations is being prepared to be launched in the near future covering:
• Energy: sale of DEPA/DESFA (Gas transporter/distributor) and 35% of Hellenic Petroleum
• Real Estate: Development of the old airport at HELLINIKO, sale and repo  of 39 buildings and 3 more buildings
• Gaming: sale of 29% of OPAP, one of the largest gaming companies in the world; sale of horse racing/betting company and sale of 49% of the Casino at Athens
• Mining: sale of nickel mining company LARCO
• Defense: sale of munition and light weapons company HDS
• Transport: concession of the 650 Km Egnatia motorway which links Turkey to the port of Igoumenitsa in western Greece

In the second quarter of 2012 Greece plans to launch the following major infrastructure concessions:
• 29 regional airports including Thessaloniki airport
• 12 ports including Piraeus and Thessaloniki ports
• The Athens and Thessaloniki water supply companies
 
The Hellenic Republic will put out for development and/or long leases around 70,000 plots of land. Real estate will be organised in lots to be placed on the market. The first lot is expected to be ready in the first half of 2012.

Also, smaller companies will be put on the market, such as truck assembler ELVO and TRAINOSE.