Банкеръ Weekly



NEW PRIVATISATION PROCEDURE FOR THE STATE INSURER TO BE MADE PUBLIC WITHIN TWO MONTHSThe contract for a new evaluation of the State Insurance Institute (DZI) is to be signed within a few days, a high-ranking official of the Privatisation Agency (PA) advised the BANKER weekly. Three companies bid in the tender (held a month ago) for conducting due diligence at the state insurer. The tender for DZI's valuator was again won by Deloitte Touche (as during the first attempt for the sale of the state-run insurance company). DZI was evaluated at about USD35MN during the divestment procedure last year. According to experts, the worsened financial situation of the insurer and the high price, demanded by the State, repulsed investors from the first privatisation procedure. Pundits point out the same reason for the appearance of a single candidate-buyer - the consortium between TBI and the management-employee buyout company (MEBO) DZI 2000 - in the first tender. The consortium had offered to pay USD20.5MN, part of it in debt instruments. However, the deal failed because for almost a year the PA could not reach an agreement with the candidate-purchaser about the price and the way of payment.Deloitte Touche should be ready with DZI's evaluation by end-January 2002, and the new divestment procedure is to be opened in February, a representative of the executive told the BANKER weekly. It is claimed that the state insurer's financial state is better than a year ago. Therefore, DZI's new evaluation is expected to be higher than USD35MN.The aggregate profit of the DZI insurance group (including three insurance companies) for 2001 is pre-estimated at about BGL2MN. For comparison - in 1999 and 2000 DZI posted losses of BGL3MN and BGL4MN, respectively.DZI's fair financial performance in 2001 give grounds to expect a more serious interest on the part of candidate-buyers during the second privatisation procedure for the company's sale. According to sources close to PA's Executive Director Apostol Apostolov, the insurer's divestiture is to be effected in several stages through sale of packages of DZI shares on the Bulgarian Stock Exchange. However, the opportunity for assigning the company's management to foreigners and sell it only when it becomes competitive according to western standards, should not be ruled out.Such a divestment scheme has already been proposed by the Paneuropean insurer Eureco, which is pointed out by observers as the most serious potential buyer of DZI. A Bulgarian bank has also announced interest towards the state insurance company, PA officials announced. Informed sources said First Investment Bank was this financial institution, but its managers refused to comment. Insurance circles do not rule out the possibility for Italy's Generali to renew its interest in DZI. A British financial group has also hired consultants in Bulgaria to acquaint it with the opportunities of the local market for the development of insurance and pension insurance activities. The Dutch insurance company Nederlanden (within ING Group) is also investigating the possibilities for business in that branch in Bulgaria. According to pundits, however, the interest of the Dutch company is not towards DZI. Their intention is rather to buy a small Bulgarian life insurer or register a new company in this country, informed sources say.Three Turkish financial groups are allegedly investigating the opportunities for insurance business in Bulgaria, too.

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