State’s REN stake purchase has no budget impact, INE says

Portugal’s purchase of a 13.7% stake in power grid operator REN will be recorded as a financial transaction, with no impact on the budget balance and no direct effect on public debt, the national statistics office INE told ECOnews.

INE said the acquisition of company capital through the purchase of shares “constitutes a financial transaction” and should therefore be recorded in the financial account, “without impact on the financing capacity/need of the General Government” — the deficit or surplus — and with “no direct effect on public debt”.

REN said in a filing to CMVM, Portugal’s securities market regulator, last Friday that the Portuguese state had agreed to buy 91,723,676 shares from Pontegadea Inversiones, the family office of Zara founder Amancio Ortega. Prime Minister Luís Montenegro later called the purchase “very, very important”, saying it was aimed at protecting Portugal’s strategic interest in its electricity infrastructure, taking part in strategic investment decisions and lowering energy prices.

The price of the deal was not disclosed by Montenegro. Jornal Económico reported on Wednesday that the state will pay €380 million, including a €55 million premium, and that the contract has been sent to Tribunal de Contas, Portugal’s audit court, for approval. Negócios also reported that Parpública, the state holding company, carried out the valuation and will fund the acquisition using its own financial resources, with the state budget to be tapped only if those funds prove insufficient.

Parpública received a €42.77 million capital increase shortly before the REN deal was announced, taking its capital to €2.042 billion. The transaction has also drawn political scrutiny, with Socialist Party leader José Luís Carneiro asking the prime minister to explain the rationale, price and financing of the purchase.

Originally published at Eco.pt