Spotlight: Chinese COSCO's bid for acquisition of Piraeus port accepted: Greek privatization fund

Chinese COSCO Group's improved bid for the acquisition of Piraeus port, the largest port in Greece, was accepted on Wednesday by the Greek privatization fund, according to an official press statement.

"During today's session, the Hellenic Republic Asset Development Fund (HRADF)'s board of directors accepted the improved offer made by COSCO Group (Hong Kong) Limited in the context of the tender for the sale of the 67 percent of Piraeus Port Authority (PPA) shares," an HRADF press release said.

Under the tender's conditions as soon as COSCO submits the required complementary documents it will be designated as "preferred investor."

The Chinese group submitted earlier on Wednesday an improved binding offer of 22 euros per share which accounts to 368.5 million euros for the controlling 67 percent stake in PPA, according to HRADF's announcement.

The fund's governing board had opened COSCO's initial offer on Jan. 12, but requested an improved bid.

Evaluating COSCO's bid during Wednesday's session the privatization fund took into account the independent experts' appraisals that HRADF had commissioned, the statement said. Although no numbers were revealed, according to sources close to the Fund the two independent experts suggested the sale for 18.4-21.2 euros per share.

PPA was valued at 337 million euros on Tuesday's share price at the Athens Stock market.

The Chinese company was the sole bidder in the final stretch of the international tender that was launched two years ago, as other candidates shifted their interest in other tenders recently.

Under the current timetable, the concession agreement must be approved by PPA's shareholders in February, then Greece's Court of Audit and the parliament. The process was expected to be completed by May, according to HRADF sources.

COSCO has committed to invest an extra 350 million euros over the next decade in infrastructure works at Piraeus port, according to the press release.

Should the deal is finalized COSCO will obtain the majority stake of 51 percent in PPA in the first phase for 280.5 million euros, and the rest of the shares in five years for 88 million euros, according to the statement.

Greece estimates that the overall benefit of the transaction for the Greek economy until 2052, when the concession agreement expires, will reach 1.5 billion euros, the HRADF announcement said.

Since 2009 COSCO's subsidiary Piraeus Container Terminal (PCT) manages Piers II and III at Piraeus under a 35-year concession agreement posting impressive results, while PPA today runs Pier I.

COSCO's vision to turn Piraeus into a leading international transit hub for products and services from Asia to Europe has already attracted other major multinationals at the port which are cooperating with PCT to distribute their products in the region.

Piraeus port privatization is also viewed by local and foreign officials and analysts as a significant boost in the overall progress of the Greek privatization program.

In its official announcement on Wednesday the HRADF welcomed the "development of major significance for the Fund and the Greek state" as an "important landmark" in the privatization program.

The 50 billion euro worth program launched in 2010 as part of efforts to overcome the Greek debt crisis and support growth has suffered several delays, but over the past month progress steps have been made.

In December 2015 Greece finalized the privatization of 14 regional airports and the sale of the Astir Palace seaside resort in Athens.

Greek officials have said that they expect to raise about 2.5 billion euros from privatizations of state assets in 2016. (1 euro=1.09 U.S. dollars) Enditem