William Malcolm

CEZ Looking To Offload Its Turkish Assets

ČEZ would like to sell its Turkish investments, which it lists among the key intentions in the presentation for investors. “We have had Turkish assets ready for sale for some time. Due to local specifics, we do not plan any formal sales processes there, rather we are constantly probing the market to see if there would be any interest in it, ”Pavel Cyrani, CEZ’s Vice Chairman of the Board of Directors, told the E15 daily.

In Turkey, ČEZ, together with its Turkish partners, owns the company Akcez Enerji, which has a stake in the distribution and sales company. In addition, CEZ has a nearly 37.4 percent stake in Akenerji Elektrik Üretim, which operates several hydropower plants, the Ayyildiz wind farm and the Egemer steam power plant.

CEZ has been trying in vain to get rid of Turkish assets for many years. “It simply came to our notice then. In the current situation, it is not for sale, which is known to ČEZ, “emphasizes Michal Šnobr, an analyst at J&T Banka and an investor in ČEZ shares.

The Turkish economy is in crisis as its currency fell to a record low against the dollar, which sold more than 8.8 Turkish lira, in early June. The reason is the long-term flight of foreign investors from Turkey due to concerns about the country’s inflationary future, which intensified after the steps of authoritarian President Recep Tayyip Erdogan, the enemy of raising interest rates.

Because of this, Sahapa Kavcioglu was a supporter of the relaxed monetary policy at the head of the Turkish central bank. Since then, the lira has lost over sixteen percent of its value against the US currency. Erdogan is still pushing for loose monetary policy, even though inflation is almost 17 percent.

Cyrani also admits a complicated situation. “The Turkish economy does not have much confidence from foreign investors. So the sale will not be easy, “he said.

An example of the unhappy situation in the Turkish economy is the development of Akenerji Elektrik Üretim’s share prices, which have lost over forty percent of their value since the beginning of the year. One share sold yesterday for 1.30 Turkish lira.

The value of ČEZ’s share is thus approximately 871 million crowns. However, for this amount, the energy group would probably not get rid of its investment. “It would sell it at a discount compared to the market price,” adds Petr Bártek, an analyst at Česká spořitelna.

According to Šnobr, in addition to the problems of the Turkish economy, CEZ’s complicated relations with its Turkish partner also contribute to the unsuccessful sale.

Therefore, analysts do not rate CEZ’s Turkish anabasis as successful. “After the change in the political atmosphere in Turkey and the weakening of the currency, the results were not as expected,” says Bártek. Even more critical is Šnobr: “Basically, all ČEZ’s investments in the Balkans are a big mess.”

The sale of Bulgarian assets by ČEZ, which is to be acquired by the Bulgarian company Eurohold, is also being stretched. “The partner is now working to take all the steps on his side, which is mainly funding,” said Cyrani. According to Šnobr, Eurohold has a problem raising money.