Portugal's asset sales attract foreign investors

Lisbon The factors forcing Portugal to seek a bailout in 2011 have triggered a wave of mergers, acquisitions and government disposals in the country as it prepares to sell more assets such as flag carrier TAP.

Mergers and acquisitions in the first quarter rose to €6.1 billion (Dh28.1 billion), extending one of the strongest deal streaks in almost two years, according to Bloomberg data, buoyed by the government's sale of state-owned assets and a series of takeover bids. Brazil's Camargo Correa expects to register its €2.5 billion bid for Cimpor-Cimentos de Portugal in the coming days, an official speaking for Camargo said.

"Although the merger and acquisition activity is temporary, I expect it to continue this year at least until the sale of TAP and airport operator ANA is concluded," Jose Gabriel Chimeno, a partner in Lisbon at consulting firm Deloitte, said in an interview. There's an "opportunity to buy assets that were not for sale in the past," he said.

IMF bailout

Last year, Portugal became the third euro-area country after Greece and Ireland to request a bailout from the European Union and the International Monetary Fund (IMF). As part of that aid package, the government agreed to sell stakes in companies, including the biggest utility and the energy grid operator, while banks have to deleverage and boost capital ratios.

The country received many indications of interest for TAP, Maria Luis Albuquerque, secretary of state for treasury and finance, said on Friday. There will be "very significant" demand, Albuquerque said, for the carrier and airport manager ANA-Aeroportos de Portugal, which are set to be sold by the end of the year. The country also plans to sell the freight branch of rail service operator CP-Comboios de Portugal and postal operator CTT-Correios de Portugal.

The IMF noted in April that the sale of a 40 per cent stake in REN had been at a "substantial premium" to market prices.

Angolan investors have also been raising stakes in Portuguese companies. Isabel dos Santos, the daughter of Angola's president, is the biggest shareholder in Portuguese cable-television company Zon Multimedia, and holds 19 per cent of Portuguese lender Banco.

While Portugal's biggest banks have been the most involved in the large deals, small financial advisers are setting up shop in Lisbon to grab a piece of the action.

"The time seems just about right to increase our presence in the Portuguese market," Paulo Gray, principal of financial advisory company StormHarbour, said.

Potential bids: Interest from China

Chinese bidders have emerged in numerous deals for Portuguese companies.

Portugal said on December 22 that China Three Gorges Corp. will pay €2.7 billion (Dh12.4 billion) for 21 per cent of utility EDP-Energias de Portugal to gain access to wind and hydropower assets from Europe to the US. The bid by the world's biggest dam operator was a 54 per cent premium to the December 21 market price, Portugal's state holding company Parpublica said.

In November, refiner China Petrochemical Corp. agreed to buy 30 per cent of the Brazilian unit of Galp Energia, Portugal's biggest oil company.