Turkish PM signals IPO for part of highways

Erdoğan told reporters in İstanbul that his government scrapped the tender “because the price tag was not high enough."

Turkish PM signals IPO for part of highways

World Bulletin / News Desk

A certain share in Turkey's major highways and bridges could be offered to the public -- or private stock market investors -- following the cancelation of a $5.7 billion tender for the privatization of toll roads and bridges over İstanbul's Bosporus, Prime Minister Recep Tayyip Erdoğan said on Saturday.

Erdoğan told reporters in İstanbul that his government scrapped the tender “because the price tag was not high enough,” adding: "There are different kinds of privatizations. It doesn't have to be a block sale. Work is being carried out [including] on a public offering. We could take a step that would offer to the public a certain share."

The High Privatization Council, chaired by Erdoğan, on Friday scrapped the tender, won in December by a consortium made up of Koç Holding, Turkey's largest company, local partner Gözde Girişim of Yıldız Holding and Malaysia's UEM Group Berhad.

Officials complained the bid was too low when annual revenue was taken into account. At the time of the tender, the state highway agency said the bridges and roads raised TL 740 million ($412.4 million) in the first 11 months of 2012. The package of eight roads and two bridges, including the Edirne-İstanbul-Ankara motorway and the Bosporus and Fatih Sultan Mehmet bridges linking Europe and Asia, were offered as a single package for a period of 25 years in the tender. The sale had not been finalized and remained in state hands.

The bridge tender was not the only one to see government refusal last year. Several other sales of state assets have been postponed. Observers argued a credit upgrade by Fitch to “investable level” -- expected to deem the country attractive enough for foreign and local companies -- has encouraged Turkey to be stricter in privatizations. It is not clear whether Turkey will move towards becoming a reluctant seller of public assets. But one thing is for certain in this latest case: The government failed to meet its 2012 budget target of TL 12.5 billion in privatization receipts. This has critical importance in a time of narrowing public finances amid the lingering eurozone sovereign debt crisis.

Highway privatizations have different examples in various countries. In Italy, a 30 percent share in its highways belongs to a private company, while the remaining shares are publicly traded. In France, an 80 percent share of its highways is held by three companies following a privatization tender in 2005. Japan privatized its highways in 2005.

In Turkey's case the late Prime Minister Turgut Özal's government started to sell the country's publicly owned enterprises and assets in 1986. Özal issued revenue sharing certificates in 1984 for the planned second bridge -- Fatih Sultan Mehmet -- over the Bosporus and the revenue from the sale of these certificates was used to finance the bridge.

Last Mod: 24 Şubat 2013, 17:20
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