Tough funding climate delays Turkish privatisations
* High valuations, tough funding hitting Turkey privatisations
* Bid prices have fallen, tenders delayed
By Sujata Rao
LONDON, May 19 (Reuters) - High valuations and tough funding conditions due to the euro zone crisis are affecting Turkey's privatisation plans, forcing the postponement of several recent tenders, delegates at the EBRD's annual meeting heard on Saturday.
"Pre-crisis, the first priority was asset quality. If it was good, banks were able to provide lending even if you didn't have equity," Suha Gucsav, CEO of Turkish conglomerate Akfen Holding told a conference at the European Bank for Reconstruction and Development Bank's meeting.
"Post-crisis, the first thing banks ask is who is the sponsor, second what's the equity, then the asset and that is a dramatic change in environment."
Akfen is involved in construction, power generation and also has a stake in airport operator TAV. The company bid for a 10 percent stake in Baskent, a state-owned gas distribution company and is also keen on the multi-billion dollar highways and bridges in the privatisation tender.
However, the privatisation agency recently pushed back bidding deadlines for several major highway projects and last month cancelled the Baskent auction after all four groups withdrew from bidding.
Since 2008, several tenders have been postponed after tender winners were unable to secure funding as credit markets ran dry.
Prices have also fallen, with the Baskent asset carrying a minimum bid price of $626 million this year compared to a previous tender for the firm that initially drew a winning bid of $1.6 billion.
Gucsav said that while the assets were attractive, valuations were still too high given the tough global backdrop.
"To attract investments, the concessions have to be bankable. Banks...will focus more on the bankability of deals," he said, adding his company was trying to put together a consortium of 30-40 banks to support its bids.
Thomas Maier, managing director for infrastructure at the European Bank for Reconstruction and Development, said it was important for Turkey to make some progress with privatisations and urged the government to seek alternative funding sources.
"What the market needs is to see some of these transactions to actually close, otherwise a credibility gap may open between the government's plans and its ability to close transactions," he said.
Maier said the euro zone crisis, which has led to a lending pullback by the region's banks, meant bank lending will not be the main source of funding for future projects.
"What's clear is banks cannot do repeat transactions year in and year out, we need to explore how to get sovereign wealth funds and capital markets involved in this business," he said.
"Without that, there will be a funding gap and some of these transactions simply will not be done." (Editing by James Jukwey)
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