CEO Insight Interviews Mrs. Lila Tsitsogiannopoulou, Head of HRADF
CEO Insight: What is the remit and role of the Hellenic Republic Asset Development Fund, and where does its mandate come from?
Mrs. Lila Tsitsogiannopoulou: Τhe Hellenic Republic Asset Development Fund was established in 2011 with the purpose to grow the private assets transferred to it by the Greek State, in accordance with the internationally undertaken commitments and the provisions stated in the Midterm Frameworks of Fiscal Strategy. The Fund has a mission statement to implement the Privatisation Program, to maximise value brought to the Greek State via public debt reduction, generation of direct investment that fuel economic recovery and growth and opening up of market sectors and increase competition leading to more, better and higher value products and services to users and consumers.
We are in close cooperation with the Greek Government and along with our sole shareholder which is the Hellenic Corporation of Assets and Participations; we promote the country’s privatisation plan, holding full responsibility to comply with existing policies. Our Asset Development Plan, which is the backbone of our remit, is recommended by the Board of Directors of the Fund, is endorsed by the Greek Government and acknowledged by our creditors and we are executing it with the certainty of optimism; that of establishing the foundation for restarting the development process in the Greek economy. The Fund is directed by a 5-member Board of Directors which has the sole responsibility for its operation. A Council of Experts comprising of 7 highly skilled and recognised professionals, as well as 2 observers with no voting rights participate into the BoD’s meetings, appointed by the member-states of the Eurozone and the European Commission.
"Greece holds a crucial geopolitical location and many investors want to take advantage of that because it offers close access to Southeastern Europe and the Eastern Mediterranean."
CEO Insight: With the privatisation program set to yield resources for infrastructure development and enhancement of the Greek tourism product, what form will these take?
L.T: We have a significant track record of success stories both in the infrastructure, corporate and real estate sectors. Our on-going programme since 2011 has numerous examples of how privatisation attracted private income and generated monies for the Greek State. The most recent successful privatisation is the sale of 67% of the Thessaloniki Port Authority to the consortium of Deutsche Invest Equity Partners GmbH, Belterra Investments Ltd. and Terminal Link SAS totalling a staggering €1.1 billion with binding obligations to increase the commercial load, expand the cruise season and invest on the enhancement of the port. A similar successful example is the sale of 67% of Piraeus Port Authority last year to Cosco at a €1.5 billion deal, including mandatory capex of €350 million and the Hellenic Republic’s expected revenues totalling €410 million, with emphasis on the upcoming investment of the cruise harbour.
Another recent privatisation is the completion of the concession agreement of 14 regional airports to Fraport, where the investor paid a lump-sum price of € 1.234 billion plus annual lease payments and upgrade program for all airports, where the Government expects cumulative fiscal, social and other benefits to reach €4.6 billion. The improvement of the airports’ facilities is essential and will change their appearance as entrance gates in the country. The Fund holds in its portfolio significant and unique assets, such as ports, airports, water supply companies, gas companies, highways, railroads, energy as well as real estate, that we are seeking investment interest and a ‘dowry’ with benefits other than the bid price.
I personally support sustainable long-term growth of the Greek economy through mandatory obligations and incentives to the investor to create micro-economies especially on real estate assets that affect in the most direct way the local societies. The tourism sector you mentioned is one of the most crucial revenue sources for the country and remains a growth pillar, contributing to new jobs and showing continuous increase rates.There are various opportunities for investments as well as developing alternative types of tourism. The Fund holds a number of properties that may be developed to hotels, resorts, recreational parks, spa & wellness resorts, etc. and there is keen interest from investors from all over the world.
CEO Insight: What volume of privatisations of assets have been completed to date?
L.T: Through its 6 years of operation, HRADF has completed 37 privatisations with a total value of €6.8 billion. An amount of around €8 billion should be added to this sum that will flow in the Greek economy in the form of mandatory direct investments which are included in the contract agreements of these projects. At the moment there are more than 20 projects in progress or in preparation. Our goal is to generate a total of €5.8 billion until 2018. We trust that the current income flow, which is expected to increase during 2018-2019, will contribute the most to the economy’s refuel and the creation of thousands of new employment positions, to the upgrading and the construction of new infrastructure. Some of the most prominent is the concession of operation for “Egnatia Odos” motorway – a vital motorway that basically connects Turkey with the Balkans and Italy through Greece, as well as the concession of Alimos Marina of Attica, the largest in the Eastern Mediterranean.
"Our excellent co-operation with investors does not end upon the conclusion of a tender and the concession of an asset."
CEO Insight: How is transparency assured in the investment process?
L.T: The privatisation’ procedures are absolutely transparent and safe-guarded. We faithfully follow international tenders’ practices and procedures. In order to ensure full transparency the Fund has set corporate policies, uses internal and external auditors, and is subject to parliamentary audit. The active involvement of 3 independent parties safeguards the decision-making process: the Council of Experts, the Independent Valuers and the Court of Auditors. After the BoD decides to proceed with any privatisation, the agreement is submitted to the Court of Auditors for a pre conditioned audit. We use Greek and Foreign Independent Experts and Valuers while the whole process is supervised by our Council of Experts with active participation from European Institutions’Representatives.
All decisions made by the BoD of the Fund are supported by formal recommendations from our appointed financial, legal and technical advisors and we follow a standard process from inception to completion, with a distinct preparation phase followed by an implementation phase, which concludes to the financial closure and transfer of privatisation proceeds to a debt reduction account.
Our website www.hradf.com contains all information for the Asset Development Plan and the upcoming projects and all tenders are announced on national and international press and our website. All interested parties can see the information for each asset and either contact our Consultants or HRADF. In any case there is a standard procedure for everyone, as is access to informational material, given the fact that equal treatment is a core characteristic of our operation.
CEO Insight: Would you describe the investment process as straightforward?
L.T: In accordance to market conditions and based on the rules of transparency, effectiveness and the public interest, we operate with the necessary flexibility in order to attain the best possible terms and maximise benefits for the Greek State. We have promoted and taken through a significant number of privatisation at a rapid pace during the past two years and we continue to keep up this good tempo. Through the public tenders’ announcements, HRADF has managed to attract investors’ attention not only from Europe, such as Fraport, but from all around the world, like Cosco.
On average the privatisation process lasts from 9 to 15 months, from the beginning of the preparation stage which includes the appointment of advisors, financial, legal and technical assessments of the asset, asset structure, marketability analysis and market assessment, until the cash collection. Several new tenders will be launched during 2017-2018 such as the sale of natural gas companies’ shares, concession of marinas, sale of major estates, buildings and hotels and others that will shortly be announced.
CEO Insight: Can you tell us about any incentives and benefits, as well as details of any aftercare that will be of interest to potential investors?
L.T: Greece holds a crucial geopolitical location and many investors want to take advantage of that because it offers close access to Southeastern Europe and the Eastern Mediterranean. Its strategic location makes it a crossroad for transportation and logistics, and the fact that it is a member of the EU and the Eurozone is quite an advantage. Investors acknowledge that.
We meet with potential foreign investors every day and we are absolutely honest with them. We present them the real picture for every asset together with the conditions in the economy and the state structure. At the same time, we assure them, and they later find out in practice, that we will stand by them to support and to help them overcome possible obstacles. They realise the growth potential in the sectors of tourism, combined transport, logistics and real estate, and they want to be part of the Greek economy’s re boost. Our excellent co-operation with investors does not end upon the conclusion of a tender and the concession of an asset. We stay close and support them in their plans’ implementation, as an after sales service and guide them through the Daedalus public system.
For more details: www.hradf.com