SOE advisors in town for discussions
The financial transaction advisors, advising on the State Owned Enterprises (SOEs) restructuring are in town for the next two weeks, officials said.
International Finance Corporation (for SriLankan Airlines, Sri Lanka Telecom and Lanka Hospital Corporation), Alvarez and Marsal (on Sri Lanka Insurance) and Deloitte India (on Canwill Holdings Pvt Ltd, and Litro Gas Lanka) and Colliers Singapore on Hilton were selected as transaction advisors.
Suresh Shah, Head of the State Enterprise Restructuring Unit, told the Business Times that some of them will be in town this week.
He said that the transaction advisors will give options and make recomendations with respect to the transaction strategy for each entity. “The evaluation committees will study the options and the pros and cons of each when reaching a conclusion.We will not accept unsolicited proposals,” he said at the CFA CEO Forum – Rebooting Sri Lankan Economy on Friday.
The restructuring unit had also recommended to the cabinet that SOEs remaining under state control follow disclosure requirements like in the Colombo Stock Exchange (CSE) – essentially advocating for single borrower limits to come in and not park subsidiaries under SOEs in future.
The Expression of Interest (EoI) for the two hotels – The Hilton and Hyatt and Lanka Hospitals will be called in August and the other entities later this year, he told the forum.
A cabinet-appointed project committee and negotiating committee will do the evaluation of the EoIs. Thereafter, shortlisted candidates will be requested to submit technical and financial proposals in response to RFPs. The evaluation of these will also be done by the two committees.
The transaction strategies will be sent to the cabinet for approval, Mr. Shah said that SOE restructuring will be a proper, credible, transparent process. “Not only are we looking at the monetary value but also the credibility, capability and the experience of investors who will invest in these entities.” He said that around 15 to 20 SOEs aren’t operational and can be wound up and that about 85 of them can be restructured. “There has been no pushback from the public on restructuring, which is encouraging.”
Tata Group which bought debt-ridden Air India – formerly India’s national carrier – from their government for US $ 2.2 billion in 2021 is interested in expanding its footprint in this sector, but contrary to popular belief, they declined SriLankan Airlines as they have a lot on their plate, Finance Ministry officials said.
They said that a strategic investment in the Hilton, which is also to be restructured, is an option for the Tata Group, but the government also wants to retain an international brand such as Hilton in the country. Tata Sons Chairman Natarajan Chandrasekaran visited Sri Lanka this week to explore potential investment prospects.
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