Privatisations results by country
Even if the privatisation process is no longer on the agenda in many CEE countries, important transactions are still pending or are on the priority list of investors. After years of continuous growth at a regional level and a surge in both the volume and value of privatisation activity in 2005, last year produced, at the first glance, quite contradictory figures. While total value of privatisation deals fell from USD 22.8bn in 2005 to USD 7bn in 2006, at the same time the number of state sell-offs leapt from 322 to 490, giving the region the appearance of a booming market.
For volume of privatisation activity, the power houses of the region were Serbia – 210, Russia – 158 and Poland – 56, which accounted for 87% of all privatisations in CEE. As for value, the top five sell-offs totalled USD 3.7bn representing 53% of the entire CEE privatisation market. This compares with USD 17.6bn and 77%, respectively, in 2005. Consistently, average disclosed deal values dropped significantly to USD 45m from USD 275m based on a near 100% disclosure rate.
The structure of privatisation activity remained the same at 85% for domestic and 15% for inward deals, respectively. The most active bidders were holding companies in the Virgin Islands (10), Slovenia (6), Italy (5) and Germany (5). Together these nationalities accounted for 36% of a total of 73 inward privatisations. Heightened geographical concentration also applied to the bidders’ respective market strategies. Most interestingly, three of the top bidding nations – the Virgin Islands, Slovenia and Italy – closed all of their deals in Serbia. Other growth privatisation markets, such as Russia and Ukraine, appear to be less favoured by foreign investors.
Privatisations results by industry
With regard to industry sectors, manufacturing took the lead last year with 154 privatisations. It was followed by services (71), food & beverages (53) and construction (49). Growth industry sectors, based on year-on-year volume growth, were retail and wholesale (467%), services (154%), food & beverages (130%), manufacturing (64%), transportation (58%) and construction (53). Major drivers behind that growth were the trio of Russia, Serbia and Ukraine.
In the flat or declining markets of Bulgaria, Hungary and Poland, utilities privatisations outperformed other segments.
The largest privatisation – Telenor wins the Mobi 63 auction in Serbia
Telenor, Norway’s largest telecommunications group, acquired 100% stake in Mobi 63 for USD 1.9bn after winning an auction in July 2006. Through this deal, Telenor has acquired a 10-year licence for GSM 900/1800 and 3G operations, and over two million wireless customers. This represents a 45% market share.
Telenor’s presence in Serbia will increase the quality and range of telecom services in the country. In addition, the transaction is a true indication of foreign investors’ confidence in targeting Serbia and Serbian companies.
