The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Government is aiming to raise $125m over a two-year period by selling its ownership in the Aliv mobile provider and a solar energy financing vehicle to Bahamian investors.

The Fiscal Strategy Report, tabled in the House of Assembly yesterday, confirmed the Government is aiming to receive the much-needed "one-off" boost from these two initial public offerings (IPOs) that are currently scheduled to take place between the 2022-2023 and 2023-2024 fiscal years.

"Assumptions for the forward years include several one-off transactions that will have a positive impact on the deficit, namely the contemplated sale of the government’s shares in Aliv by the 2022/2023 fiscal period and the monetisation of the Government’s proposed solar special purpose vehicle (SPV) in 2023-2024," the report said.

"Together, these transactions are targeted to generate approximately $125m in additional resources to the Government for use in reducing financing requirements in these years." The breakdown of what it expects to earn from each transaction was not provided.

The timeline for the Government to exit its 51.75 percent majority Aliv stake, and the solar SPV, remains the same as that given in the 2019 Fiscal Strategy Report, which said then that the Government was seeking to raise at least $73m from the transaction.

"In fiscal year 2022-2023, the government's prospective sale of its shares in Aliv is expected to reduce financing requirements by at least $73m - the initial purchase cost of these assets. In fiscal year 2023-2024, sale proceeds from the proposed solarisation SVP (special purpose vehicle) are expected to lessen borrowing requirements," last year's report said.

Aliv has long represented one of the most obvious opportunities for the Government to realise a one-off injection of significant capital to narrow its annual fiscal deficit, as occurred in 2011 with the Bahamas Telecommunications Company (BTC) privatisation.

The former Christie administration had sought to exit the Government's majority stake in HoldingCo, Aliv's parent, via a private placement to Bahamian institutional investors such as pension funds, credit unions and mutual funds.

This was intended to ensure the greatest possible number of Bahamians participated, and benefited from Aliv's future earnings, via their membership and financial involvement with such institutions. However, the Minnis administration scrapped this model in favour of an IPO that would give Bahamian retail and institutional investors the chance to hold HoldingCo shares directly, rather than through another entity.

For an IPO to take place, Aliv has to establish a performance track record via audited financial statements. Carl Bethel QC, the attorney general, previously indicated that an IPO will not take place until the mobile operator achieves profitability and, while it has emerged from its growth phase and is making progress towards this milestone, it has yet to hit this target.

There was no mention in this year's Fiscal Strategy Report, though, of any plans by the Government to reduce or exit its 49 percent BTC stake via the same IPO model. The last Ingraham administration aimed to do this in tranches, but the idea has never been revived since it exited office in 2012.

The Inter-American Development Bank (IDB), meanwhile, earlier this year confirmed that Bahamian investors will ultimately be given the opportunity to own the Government’s $170m renewable energy financing vehicle through a public share offering.

It revealed that “the final aim” is for “small-scale” investors to buy in via an IPO into an entity that will be formed to channel funds lent by the bank into utility-size and roof-top solar investments.

The IDB, revealing that the proposed SPV is the Ministry of Finance’s brainchild, says it will initially be 100 percent government-owned until it “builds capacity” to own, operate and manage the renewable energy assets it will finance.

“In subsequent operations, the REE (renewable energy entity) can evolve as the renewable energy market matures as well as financing opportunities from other donors and the private sector,” the IDB paper said.

“Eventually, the final aim is for the REE to undergo an Initial Public Offering (IPO) to incorporate Bahamian small-scale shareholders and, as such, create further local participation and local retention in this new energy sub-sector."