February 26, 2024

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Losing bet on Superfund

Losing bet on Superfund

It was decided to establish it in August 2015 within the framework of the agreement with the country’s European lenders regarding the third memorandum loans amounting to $86 billion. The reason for the Hellenic Holding and Real Estate Company (EEYP) known as Super fund.

In practice, this constituted a portfolio of collateral for the country's official creditors, which included shares in the then recapitalized Bank of Greece. BanksPrivatization Fund Assets (Typed), which was founded a few years ago, but also her State Real Estate CompanyAnd also State contributions In large listed and unlisted companies. It was finally created by Law 4389 of 2016.

Although many talked about mortgaging public property, well-intentioned people believed that strict corporate governance rules stipulated in its founding law would help, on the one hand, to restructure troubled companies and, on the other hand, to distance state groups from partisan and political patronage. And putting an end to the continuous interference of the supervising minister in the decisions of their departments.

Today, nearly nine years later, there is not even a reliable independent assessment of the value of the super fund's portfolio. Except for Financial Stability Fund Many of the companies over which the superfund exercises direct supervision are in dire financial conditions.

Losing bet on Superfund-1

Come

The Greek Post Office (ELTA) “burned” the $280 million it received from the general budget after 2019. However, despite costly volunteer work, they continue to pay nearly $35 million annually to their suppliers to secure additional seasonal staff. The relevant expenses relate to employees with rudimentary skills, while the provider of “outsourced employees” receives a profit margin estimated by market sources at 20%.

Superfund Circles claims that this margin has fallen significantly, to a low single-digit percentage, but does not cite a specific size. ELTA aspires to return to profitability in 2025 but for now, the 2022 financial results announced a few weeks ago show net losses of €28 million and accumulated losses from previous years of €191 million.

public properties

State Real Estate Company (EDTA) is still incurring significant losses because it is burdened with hundreds of millions in liabilities due to the chronic failure to settle the now-infamous hotel company case. Attic SunAccordingly, compensation amounting to 620 million euros was awarded. The estimated compensation, plus overtime, now exceeds $800 million. It was even mentioned as a financial risk in successive supervisory reports issued by the European Commission after the MoUs. In addition, there are still other court cases pending in relation to the rental contracts of the properties it manages, while it, like the parent company, has not yet been able to conduct an evaluation of its portfolio.

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But in the meantime, there has been a multi-year period of massive price increases Real estateFrom rentals but also from Greek tourism. However, it is still unknown to what extent they have been able to take advantage of this environment to increase their wealth, whether Superfund or ETAD as well as other affiliates.

There is not even a reliable independent assessment of the value of a Superfund portfolio.

Asked about the Superfund representative He told Kathimerini: The Superfund asset evaluation process was outsourced in the last quarter of 2023 (!) to an independent consultant and is expected to be completed by the middle of this year. Meanwhile, on its home page, the super fund states that its portfolio is worth $5.5 billion, and that the 16 subsidiaries and holdings it controls employ 15,000 workers. However, at the “starting point”, whether this is set for 2016 or 2021, it is not known what its value is, until the owner (the Greek taxpayer) knows whether the value of the portfolio has increased or decreased in the intervening years. .

The state is still searching for its properties

Regarding the assessment of ETAD properties, likewise, Superfund sources indicate that the relevant process began in the previous months with the aim of completing it within this year. But currently, preliminary studies have noted that the number of properties actually in ETAD properties – that is, after “ghost properties” and irregular and simple title deeds – is less than half of the 72,000 properties. It was “announced” in recent years.

Phaistos box

The investment fund Phaistos (5G Holdings SA), which received part of the revenue from spectrum licenses in the mobile phone space, is also operating without a recent announced assessment of its performance, despite the fact that it has made investments in a series of start-up companies.

Big plans for the investment fund

The current management of the Super Fund actually assumed its duties at the beginning of 2021, that is, three years ago. However, the strategic plan for 2021 remains in place even though inflation and interest rates have risen strongly since then, while war conflicts in the region have created new data for international and domestic economic activity. In response to a related question from K.The super fund representative stated that the company is awaiting the new strategic directions of its sole shareholder (i.e. the state represented by the Ministry of Finance), as stipulated in its founding law. The expected period for notification of these directives, to prepare the new strategic plan, was set for the first half of 2024.

Its portfolio includes as “direct subsidiaries” the Financial Stability Fund (TFS), the Fund for the Use of Private Public Equity (TAIPED), the General Real Estate Company (ETAD), 5G Holdings SA and as “other subsidiaries” the companies Urban Transport Organization of Athens (OASA: STASY, OSY), Athens International Airport, PPC, ELTA, Corinth Canal Company, Hellenic Saltworks, Organization of Central Markets and Fisheries, Central Market of Thessaloniki, GAIAOSE, TEF – Helixpo, Iath and Aedap. Entries in the last two will be transferred directly to the country.

It was decided to increase spending on consulting fees from around 5 million in 2023 to 20 million levels.

However, in order to do this, it would have required reaching an agreement with the country's European creditors who would treat the large fund and its portfolio as collateral for the third loan note. In this way, “compensation” would be given to Superfund in exchange for the return of its shares EYDAP Which Iath To the Greek State based on the agreement of the Greek Government with the European Stability Mechanism on this issue. This amount will constitute the initial capital of the National Investment Fund, which the current management aspires to establish as a new subsidiary of the Super Fund. Water supply companies will be evaluated and 50% of the amount will be allocated to repay debts, while the remaining 50% will be used to establish a national investment fund. According to some estimates, this amount may reach 500 million euros.

The super fund becomes

But market sources doubt the possibility of developing it into a real national investment fund (Sovereign wealth fund) According to international standards, the Greek Super Fund. As they point out, “This is a very big leap from the current situation where there is no organized and well-staffed investment department and instead a service contract with a foreign company, while the risk management department is primitive.” In this regard, the representative of the Super Fund stated that these two functions were active and were being further strengthened, while for the establishment of the National Investment Fund, he stated that a relevant study had been allocated to an international investment house.

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Consultant fees are another matter. According to informed sources, spending on consulting fees of about 5 million in 2023 was included in the budget and it was decided to increase it this year to the level of 20 million. Superfund sources claim that the matter will not be that much, but they avoid mentioning that. How much will it be? They add that projects such as the evaluation of the ETAD portfolio, part of which the Super Fund supervises, as well as advisory services related to the formation of the National Investment Fund and the evaluation of the assets of the Super Fund itself, have significant costs. .

How did record revenues come in 2023?

But what are the revenues of the super fund? Its income or turnover comes from the dividends it collects from its subsidiaries within the framework of the dividend policy and the capabilities available to it. Superfund for 2023 expects income from dividends – thanks to companies AIA, GIAOSE, OKAA, KATH and Hellinikes Alykes – to double to 161 million, breaking the record of 2022, it was reported, when income was recorded. In fact, these are the huge dividends that the general meeting of the Athens International Airport decided Its distribution in light of its listing on the stock exchange (total 685 million to 100% shareholders, while Superfund controls 30%).

However, questions are also being raised about a series of other developments at companies included in the Superfund portfolio. One such example is GAIAOSE, which still does not have a managing director as of the beginning of 2023.

Due to scarcity, GAIAOSE lost access to $130 million from the Recovery and Resilience Fund.

the WelcomeAccording to informed sources, due to scarcity, access to 130 million people has been lost Recovery and Resilience Fund. In particular, it did not have enough time to submit the necessary tenders for the acquisition of 10 electric trains and 10 hydrogen-powered trains, which in turn will be leased by the company. Hellenic train As a commitment to extend her contract for 5 years. GAIAOSE will acquire the trains with advance lease payments from Hellenic Train for 40% of the total cost of €215 million, while the remaining 60% (€130 million) will be funded by resources from the Recovery and Resilience Fund. If the funding gap is not covered by Superfund, Hellenic Train may file claims (Government Gazette 07/22/22 Law No. 4953) against the Superfund group.

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Hellenic salts

Superfund management is also receiving criticism for its decision to purchase a minority stake in Hellenic Salts, as this stake was valued after a period in which significant amounts of shares (salt) were sold, which led to an increase in the company's financial numbers. Company in a non-recurring manner. However, Hyperfund's logic, as competently reported, is to benefit the specific company by having full control of its capital.

But also for OKAA Market, the historic market in Reentes built after the war with Marshall Plan funding, there is criticism of the low level of rents for users. This is something that Hyperfund circles do not deny, but remember that the market management company (which mainly rents real estate and provides the necessary infrastructure to host traders) is bound by long-term leases.