Global Report

Burning the furniture to heat Greece

 

Mired in debt, Greece is holding a fire sale these days, and there are some hot bargains on offer. For sale are beaches, ports, airports and dozens of buildings housing the headquarters of government agencies, such as the tax authority and the education ministry in Athens. Some observers worry the government is selling its wares too cheaply, but Prime Minister Antonis Samaras is keen to play hawker.

He has promised to “bite iron to bring investors to” Greece, a colourful mantra meant to express his commitment.

Beginning earlier this year, the southern European country kicked off the long-delayed sale of state assets. It wants to raise €22 billion ($29 billion) by 2020 as part of an agreement with its international creditors to reduce the country’s staggering debt burden.

The country is also selling off its shares in publicly traded companies in which it holds a majority stake. Many of these hold monopolies in their sectors and have operations that sprawl outside of Greece itself.

The sale of the government’s shares in Athens International Airport is generating plenty of buzz. Two big Chinese firms, Shenzhen Airport and Friedmann Pacific Asset Management, are currently in discussions with Greece over buying the state’s 55% share. Earlier this month, the Canadian pension manager, Public Sector Pension Investment Board (PSP Investments), bought German builder Hochtief’s airport division, which includes a 26.7% stake in Athens International Airport, for €1.1 billion ($1.4 billion).

It’s a good time to buy in Greece, say observers. For the first time in three years, some financial indicators are looking up—the country achieved a primary budget surplus in the first quarter of 2013. This is a “very remarkable achievement,” given Greece’s 15% deficit in 2009, says Nicholas Economides, professor of economics at the Stern School of Business at New York University.

But there are concerns the Greek government will sell all of its state-companies too cheaply just to put money into state coffers. Emma Delta, an equity fund controlled by Greek ship-owner George Melissanidis, bought up the Greek state’s 33% stake in OPAP, Europe’s largest listed gambling company, earlier this month. The deal was sealed at just €712 million ($950 million), even though OPAP generated €505 million ($673 million) in net profits last year alone. Some Greeks wonder where the money to actually run their country will come from if the state no longer owns its income-generating assets and has to lease its former buildings from new owners.

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