Three bidders target majority stake in Bulgaria’s insurer DZI

SOFIA – Bulgaria’s Privatization Agency has invited three candidates to submit final offers for an 80-percent stake in the small Balkan state’s leading insurer DZI by July 1, an agency spokeswoman said yesterday. An agency official said all three candidates who had placed indicative offers for DZI by the April 15 deadline would be allowed to participate in the second stage of the tender for DZI, a move industry experts attributed to possible low bids. «The candidates may place their final offers until 5.30 p.m. (14.30 GMT) on July 1,» the spokeswoman said. The agency did not name the bidders, but local press said they included Czech largest insurer Ceska Pojistovna; local Energia, a unit of Allianz Bulgaria Holding controlled by Germany’s Allianz AG; and local private Roseximbank. Ceska Pojistovna, which is owned by closely held domestic financial group PPF and has invested in neighboring Slovakia and Russia, confirmed it placed a bid, saying it was part of plans for further regional expansion. «We have evaluated this as a potentially appealing investment,» Pojistovna spokesman Richard Kapsa told Reuters. «The Bulgarian market is little developed and there is a great potential for growth.» Seeking a higher price A previous attempt to sell DZI was cancelled last November after it attracted only one bid from a consortium of Dutch-based TBI Holding and DZI 2000, set up by DZI’s managers, which offered $20.5 million for a 67-percent stake. Although no minimum price has now been set, The Banker business weekly said in its Friday issue the Cabinet would seek at least $35 million from the sale. But analysts say Bulgaria, with the lowest GDP per capita among EU candidates, may have little room for maneuvering as it is counting on the DZI sale, along with ongoing sell-offs of telecom monopoly BTC and tobacco monopoly Bulgartabak, to raise cash to cover a widening account deficit. Bids will be ranked up to 90 percent on price, the agency spokeswoman said, with a business plan accounting for 10 percent of the valuation, of which 5 percent would be for planned investment and another 5 for employment plans. At the second stage of the tender, candidates may perform detailed due diligence of DZI and meet government officials. The sale is expected to be completed in early July. Underdeveloped market DZI, which ranks first among Bulgaria’s 28 insurers, had a preliminary net profit of 1 million levs ($479,157) for last year, little changed from 2000, which DZI management said was due to the allocation of considerably higher reserves in 2001. DZI’s net premium revenue rose by 10 percent last year to 103.607 million levs, compared with the total premium revenue of Bulgaria’s insurance market of around 400 million levs in 2001. The company has 114 offices in 108 towns across Bulgaria. It has 850 employees and works with over 2,500 insurance agents. Insurance is still underdeveloped in Bulgaria, a country of 8 million where the average monthly salary is $100 a month.