Clare Nuttall in Bucharest -

Slovenia’s state investment company has entered exclusive talks with Germany's Fraport over the sale of Ljubljana airport. The news illustrates that Slovenia's privatisation process has regained momentum in the wake of the July general election, although uncertainty still reigns over the stance of Miro Cerar, who is expected to be confirmed as prime minister this month. 

Slovenian Sovereign Holding (SDH) said in an August 6 statement that it has launched the detailed talks with the operator of Frankfurt - Europe’s third largest airport. Fraport was the highest bidder for Aerodrom Ljubljana. The exclusive talks will continue for a “limited period of time” the statement adds.  Other companies interested in acquiring the 75.5% controlling stake in Slovevia’s largest airport include France's Vinci. 

Ljubljana had put its privatization program on hold for a month in early July. Outgoing Prime Minister Alenka Bratusek announced the freeze would allow the winner of the July 15 snap election to conduct the process. However, while Cerar pushes to form a coalition, the one-month hiatus came to an end on August 5, and SDH chairman Matej Pirc indicated the effort would forge ahead. 

Pirc told journalists that the sale of majority stakes in Aerodrom, Telekom Slovenije and NKBM bank would take place by the end of 2014, according to Slovenian Press Agency STA. The same day, SDH announced it had launched the second phase of the sale process of Nova KBM, after receiving non-binding bids to acquire the country's second largest bank. 

Binding offers are due to be submitted by October. SDH has not disclosed who the bidders are, but local press reports say they include two banks - one of which is rumoured to be Hungary's OTP - and four investment funds. 

Ambiguity

The recently launched Party of Miro Cerar (SMC) took the largest share of the vote on July 15. The PM-in-waiting had voiced opposition to the sales of Telekom Slovenije and Aerodrom Ljubljana in the run up to the election, and indicated he planned to amend the list of companies earmarked for privatisation, although he added that he supports the sales of smaller state companies. 

Still, Ljubljana has a pressing need to raise funds after the government was forced to spend some €3bn to prop up the banking sector and avert an international bailout last year. It remains unclear whether Cerar will step in to block some of the planned sales once he takes office, although current indications are that the new government will allow those sales already in progress to go ahead.  

Teneo Intelligence points to continuing ambiguity over the incoming PM's position. “Cerar has backtracked on his opposition to the sale of Telekom Slovenije and Aerodrom Ljubljana, citing the likely negative implications for investor confidence if these sales were cancelled," writes Otilia Dhand. "Yet, in recent statements, SMC still refers to plans for “controlled privatizations”, suggesting that the drive for the sale of state owned assets may still be curbed by the incoming cabinet, even though already-approved privatizations remain likely to go ahead." 

Cerar’s party took 34.49% of the vote in the election, giving it 36 seats in the new parliament - 10 short of a majority in the 90-sear parliament. He now appears close to forming a coalition, and has submitted a draft proposal for a deal to the DeSUS Pensioners’ Party, the Social Democrats, the Alliance of Alenka Bratusek and New Slovenia. A new round of talks is due to take place this week, and if successful Cerar is expected to be nominated as prime minister in the first half of August. 

There are, however, potential obstacles in bringing together the five-party coalition, whose members would span the political spectrum from left to centre-right. Teneo’s Dhand writes that in addition to the privatisation issue, “it may prove difficult for Cerar to coordinate disparate programs of individual parties... As a result, it is possible that not all parties Cerar has been negotiating with will eventually join his cabinet.”