Sri Lanka to seek competitive bids for state asset sales

ECONOMYNEXT – Sri Lanka will adopt a competitive bidding process for asset sales and will shortly call for expressions of interest from transaction advisors to support the divestment program, the head of the state enterprise re-structuring unit Suresh Shah said.

All assets will be sold through a competitive bidding process and no unsolicited bids will be accepted.

The first step will be to select transaction advisors.

“We will work with development financial institutions and qualified and experienced consultancy firms to provide transaction advisory services,” Shah said.

“After the transaction advisors study the companies, we will call for bids.”

Sri Lanka’s cabinet of ministers has given the go ahead for the sale of SriLankan Airlines including Sri Lankan Catering which has large volumes of debt from losses after it was taken back to state management from Emirates.

Sri Lanka Telecom, Sri Lanka Insurance Corporation, Litro Gas Lanka Ltd/Litro Gas Terminals Pvt Ltd, Canwill Holdings Pvt Ltd which owns the Grand Hyatt building, Hotel Developers (Hilton) are also in the list.

The transaction advisors will assist in “sell-side due diligence, valuation, data room creation, transaction strategy and marketing” of the firms, according to a statement from the re-structuring unit.

All assets will be sold through a competitive process. Both domestic and foreign investors could bid.

“We will not accept unsolicited bids,” Shah said. “We will follow a transparent and credible process. Whoever want to make a bid will be given the opportunity. We will call for bids both locally and internationally.”

A decision to list any unlisted firms has not has not been taken as yet but will be considered, he said.

In addition to getting immediate cash from asset sales, helping boost cashflows, the government will also bet a share in any higher future profits under private management through corporate income tax, not counting turnover taxes.

The debt of SriLankan Airlines will be re-structured before a divestiture.

According to IMF program related documents, a plan to re-structure debt of several state companies including SriLankan Airlines has to be approved by cabinet by June 2023 under a structural benchmark involving a World Bank program.

By September residual dollar loans would be transferred to the government. (Colombo/Mar28/2023)

Sri Lanka to seek competitive bids for state asset sales