Back on Track Greek Recovery & HRADF’s Role

Written by Jamie Harrison. Posted in FDI

Greece is at a turning point, with its economy recovering after a long recession. 2018 looks set to be an important year, one that will see the country shift up a gear. GDP growth likely rose to 1.6% in 2017, and all the indexes show a positive reversal in economic sentiment. There is a new framework for the reduction of banks’ non-performing loans, which have been a barrier to financing. Unemployment is declining, supporting private consumption. The perception of Greece as an investment destination is now greatly improving.

In this environment, the public property development program implemented by the Hellenic Republic Asset Development Fund (HRADF) is one of the main pillars for attracting capital and direct foreign investment into large-scale corporate, infrastructure and real estate assets. The fund was established in 2011 to privatise public assets to reduce public debt. Its mission, in close cooperation with the Greek government, is to attract direct investment in order to maximise revenues to the state as well as revitalise the economy.


According to its executive chairman Aris Xenofos, HRADF privatisation processes are guided by three non-negotiable principles. 1) Clarity: every project is examined in depth and in close co-operation with consultants. 2) Transparency: there are established corporate governance policies, the fund releases all information about its tenders to the media, and independent bodies are involved in every privatisation. 3) Efficiency: HRADF engages actively with stakeholders to eliminate administrative and technical barriers, expedite processes and support investors. Xenofos says: “We are fully committed and determined to delivering investor-friendly privatisations that are “value” accretive to our economy and to our society to the benefit of the Greek people while contributing to the reduction of the public debt”.


Where possible, HRADF includes mandatory investments in its tenders to further promote growth. An amount of at least €8bn it is expected to flow into the Greek economy in the form of mandatory direct investments included in the contract agreements of these projects. Furthermore, the fund closely considers local communities’ concerns and provides ongoing ‘after-sales’ service to investors, thus adding value.

The fund has come a long way so far, having completed 38 tenders with a total value of €7.5bn. It has reviewed many real estate properties for development and is now preparing 14 new projects. Yet there is still a lot more to be done in the years to come. The fund holds significant and unique assets in its portfolio, such as ports, water supply companies, gas companies, highways, railroads, energy companies as well as real estate. Depending on the asset and market conditions, the fund examines various privatisation methods, from the sale of shares to long-term concessions and capital market transactions.

The continued attraction of foreign capital is essential and should increase in the coming years. According to Xenofos, “everyone is aware that our country holds a crucial geopolitical location, that bridges East and West and serves as the European gateway to international trade and cruising.” Greece is becoming an energy hub for the European natural gas network, with a lot of potential for production of all types of energy. HRADF’s assets comprise several shareholdings in this industry, including Greek Petroleum (oil), Public Gas Corporation (natural gas) and Public Power Corporation (electricity currently under review and evaluation.

Part II – Infrastructure investment

Greece has a developed infrastructure that enables the uninterrupted implementation of most investment activities. Within the framework of holding the 2004 Olympic Games in Athens, and the investment in the following years, improvements materialised in a variety of areas, including infrastructure. However, the economic crisis since 2010 has inevitably reduced the available resources.

Investment is ongoing in strategic projects that facilitate transport and logistics so that the flow of goods and services is efficient, prompt and cost effective. Through private investor participation, infrastructure assets in Greece are entering a new era, and HRADF has a key role to play in this transformation through its privatisation program.


The most recent infrastructure privatisation was the sale of 67% of the Thessaloniki Port Authority to a consortium comprising German Deutsche Invest Equity Partners GmbH, French Terminal Link SAS and Greek-Cypriot Belterra Investments Ltd. The value of the agreement amounted to €1.1bn, and apart from share acquisitions of €231.9m, it includes mandatory investment of €180m within the next seven years to increase commercial loads, expand the cruise season and invest in the enhancement of the port.

A similar example is the sale of 67% of Piraeus Port Authority to Cosco in 2016. For the state, the total value of the investment is estimated at €1.5bn via projects for infrastructure expansion and upgrading. And there are huge multipliers for the economy until the end of the concession period with regards to GDP, the creation of new jobs and activity in other companies operating around ports. For the investor, Piraeus offers opportunities in ship repair, cruise lines and logistics, among other things. In an almost zero-growth environment in 2016, Cosco saw a 12.9% revenue increase and an 8.7% rise in profitability.

Another recent privatisation was the concession agreement with Fraport in April 2017 to operate 14 regional airports. Fraport paid a lump sum of €1.234bn and agreed to annual lease payments and an upgrade program for all the airports. The government expects the cumulative fiscal, social and other benefits to reach €4.6bn. For the fund, it is the biggest privatisation yet, with multiple benefits anticipated for the tourism sector, with an immediate impact on jobs and real estate. But it has been equally profitable to Fraport so far. In Fraport’s results for the first nine months of 2017, the contribution of Fraport Greece is very promising. Between January and September, total passenger traffic at the 14 Fraport Greece airports was 23.9 million, a 10.5% increase compared to 2016.

HRADF is also involved in the road network. One of the fund’s ongoing tenders is the concession of the management of the Egnatia Odos motorway. This is a long-term concession tender and is at Phase A, which means that anyone may express their interest by mid-February 2018. Egnatia Odos is a fully constructed 660km motorway with three stretches totalling 228km connecting Greece with Turkey to the east, Italy to the west, and Albania, FYROM and Bulgaria to the north.

The motorway is part of the Trans-European Transport Network (TEN-T Core) and was co-funded by the EU. Apart from linking Greece with neighbouring countries, it connects four ports, six airports and ten industrial zones located across its length. All trucks travelling from Asia through Turkey to Europe pass along this motorway. It is thus a gateway from Asia to Europe.

Looking ahead, the fund owns shares in ten regional port authorities around the country, and port concessions are being prepared. The numbers are impressive – all ports cumulatively doubled operating profits in 2016. The introduction of centralised management, homogeneous policies, standardisation of procedures, five-year business plans and investment plans have helped ports become profitable.

Studies are being conducted on the future strategy for each port. Alexandroupoli Port in northeast Greece, for example, is a gateway to the Central/Eastern Balkans and Black Sea. Its large-scale infrastructure, including a rail connection to the national network, can facilitate intermodal transport (sea-rail). Several ports have submitted a proposal to the SEA2SEA program, funded by the EU, which will further enhance the development of port activities. This program focuses on the development of an intermodal transport corridor connecting the North Aegean Sea Greek ports to the ports of the Black Sea and Danube River.

At the western end of the Egnatia Odos motorway is the port of Igoumenitsa. It is a well-established ferry hub on the northwest coast, serving both international and domestic routes and is part of the TEN-T Core Network. It has direct access to the Egnatia motorway, and the planned development of a logistics centre adjacent to the port will further enhance its potential in the inter-modal transport sector.

HRADF’s portfolio contains several marinas that could be exploited though long-term concessions. At the moment, there are two tenders open: 1) the marina of Alimos, the biggest in southeast Europe with 1,100 berths and very close to Athens, the airport and the port of Piraeus and 2) Chios island marina in the northeast Aegean, which has around 200 berths and a surrounding total land area of 41,000sq.m.

Moving to airports, Athens International Airport (AIA) performs very well. Canadian pension fund PSP Investments holds 40% of its shares, while HRADF holds 30% of the shares and the right to extend the duration of the concession agreement for 20 more years (up to 2046). In September 2017, the extension agreement was signed by the Hellenic Republic, HRADF and AIA, and the process of obtaining the necessary approvals by the European authorities is ongoing. The planning of the transaction’s structure and the timetable for the sale of the 30% stake in AIA by HRADF will take place immediately after the completion of the procedure related to the 20-year extension of the agreement.

For more on HRADF’s privatisation program, see


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