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State-Owned Assets to Be Managed by New Agency

Ljubljana, 15 April (STA) - The government adopted Thursday a bill overhauling the state-run KAD and SOD funds which stipulates that stakes in strategic companies will be transferred to a new agency for the management of state investments.

KAD's supplementary pension business will be spun-off into a new life insurer it will wholly own, but KAD will continue to manage the fund of supplementary pension insurance, Finance Ministry State Secretary Helena Kamnar revealed.

While initially proposing a bond issue raising EUR 900m for the pension purse operator ZPIZ, the final version states that KAD will provide EUR 50m annually to the pension purse as of 2011. The amount will be indexed to inflation.

Also undergoing restructuring as part of the proposal would be SOD, which will obtain assets from the state-run DSU company related to privatisation and denationalisation.

DSU will continue to manage state real estate initially but it will eventually be folded into a fund for the management of state real estate that is yet to be established.

SOD, which pays out state compensation, foremost in denationalisation cases, will be phased out in 2016, when the final installment from its bond issue is due. By then SOD will also have to wrap up all procedures related to ownership transformation started by the DSU.

Both KAD and SOD would be limited in handling state assets and would effectively become portfolio investors with a EUR 40m cap on the book value of stakes in any given company and a limit of 5% of share capital.

Any shareholdings in excess of EUR 40m will be managed by the new agency; the stakes will formally be owned by KAD and SOD and they will get dividends and other revenue.

According to Kamnar, the bill does not say which specific stakes will be managed by the new agency, but it says they include all shares in all companies where the two funds can name supervisors, which in effect means stakes in excess of 25%.

The government is convinced the new legislation will make asset management more transparent and efficient, as it draws a clear line between state ownership and its regulatory role.

The establishment of the new agency is a key precondition for Slovenia's membership of the Organisation for Economic Cooperation and Development (OECD).

Prime Minister Borut Pahor said Slovenia was hoping to receive a formal invitation for membership on 27 May.

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