It is a clear boost for the company itself. DEI the decided share capital increase by approximately €750 million, as it enables it to tidy up its balance sheet and increase its cash reserves so that he can exercise aggressive investment policy in sectors with increased profit margins.
For the State itself, however, which decided to transfer the majority of its 51% holdings and retain a statutory minority stake (34%), there are many questions, mainly concerning its ability to control the strongest player in a critical area, such as electricity generation and supply.
Moreover, the government's rhetoric regarding the role of the Public Power Corporation (PPC) in keeping electricity prices down through discounts adopted by the state-owned company is recent.
Criticism from the opposition and workers is harsh, as they accuse her of «selling off the silverware» and «leading to the loss of PPC, a company of strategic importance and a lever for economic growth for the country.».
However, relevant government officials argue that even with the new structure, the state will control PPC, given that no strategic partner is entering the company, as is the case with HEDNO, DESFA, or ADMIE, but rather The State, through the Superfund and TAIPED, will be the main shareholder of the company, will be a minority shareholder with increased rights (minority block) and will, of course, have management control.
In any case, This is a «velvet» and peculiar privatization of the Public Power Corporation, since the State will fall to the limits of a statutory minority (33-34%) from 51%, with the percentages relinquished by the State being covered by institutional foreign and Greek investors. «Based on the initial response from investors (through a standard confidential market sounding/wall-crossing process), the Company has received indications of significant interest and support for the transaction,» PPC said.
How will this be done technically? According to information, TAIPED (which controls 17% of PPC) will not participate in the share capital increase, while the Superfund, which holds 34%, will normally exercise its right.. The same information explains that the above combination was deemed to be the most advantageous option.
If one overlooks the fact that the state is losing shares and focuses solely on the capital increase itself, there is no doubt that this will strengthen the company.
What is the rationale behind the share capital increase? It will enable PPC to accelerate and increase its investment program to the «unrealistic» level of €8.4 billion by 2026, with the aim of having 9.1 gigawatts of installed RES capacity (including hydroelectric power stations), but also to expand, through acquisitions and other moves, into neighboring markets in Southeast Europe, taking advantage of potential growth opportunities in the region.
As the PPC management mentioned during yesterday's presentation to analysts, the share capital increase will allow for the above new investments while keeping the company's balance sheet strong. The total investment amounts to €8.4 billion, of which €0.8 billion will come from the share capital increase, €1.3 billion from borrowing, €1.3 billion from the sale of HEDNO, and €2.1 billion from operating cash flows. As regards the use of the €8.4 billion, €2.1 billion relates to RES, €0.8 billion to RES-related purchases and €1 billion to distribution. The Company's leverage is expected to decrease from 3.2 to 1.8 after the sale of HEDNO, while by 2026 it is expected to range between 3 and 3.5 due to the investment program.
