Balkan privatisation plans hit by financial crisis

* Political infighting also hampering sales

* Countries may target greenfield investment instead

* Telecoms less affected, still attractive

By Zoran Radosavljevic

ZAGREB, Oct 23 (Reuters) - Balkan countries still contain some corporate "gems" waiting to be privatised, but the global financial crisis and political infighting is likely to slow the sale of state assets next year, analysts said on Thursday.

Instead, the region -- which is trying to build closer ties with the European Union -- could try to compete for alternative greenfield investments, with less risk and more benefits.

Bosnia's Serb half, Republika Srpska, signed a protocol on cooperation with General Electric (GE.N) on Thursday, paving the way for future investment deals in infrastructure, transport, health and energy.

It was the second successful effort in a month in the relatively poor Balkans to ensure badly needed foreign capital, after Italy's Fiat (FIA.MI) clinched a billion-dollar deal with Serbia, the country's biggest single foreign direct investment.

"The (global) crisis will considerably reduce available investor funds for privatisation and cut their appetite as liquidity is no longer that good, so I expect a slower pace of privatisation," said Hrvoje Stojic of Hypo Group.

Croatia -- the westernmost Balkan country, which hopes to join the EU by 2011 -- has sold most of its assets, and so have Albania and Montenegro.

But Serbia and Bosnia's Muslim-Croat federation still have some way to go, most notably with national telecom operators, although it is unclear when their sale might take place.

Gabriel Dielacher of Vienna Capital Partners investment consultancy said privatisations were going "the other way round now, from private back to state ownership." He said the state should sell only if it badly needed funds.

"In that case, more courageous investors could clinch good deals," he said.

NEW TAKE-OFF?

Investors were now carefully watching companies and their finances. "But I'd say telecoms, food, drugs are less affected, they are something that will always be around," he said.

The sale of Serbia's national operator Telekom Serbija was planned for 2009, but Finance Minister Mladjan Dinkic said it should be postponed due to the global crisis.

A tender published for flag carrier JAT Airways this year attracted no bidders, while a third tender for copper complex RTB Bor, still under way, could hint at success after two failed attempts, with 11 companies interested in the troubled miner.

"Serbia is off the radar for investors, who are more focused on value stocks available in the West. In the short-term, investors should wait for more recovery signs in developed markets before turning to emerging markets," said Mladen Dodig of Synergy Capital, Erste Bank's brokerage arm in Serbia.

But he said Serbia could need to press ahead with sell-offs because the government needs revenue to plug budget holes.

"It is therefore possible that privatisation will move faster, but it is difficult to say if they will succeed".

He said Serbia might have more luck in attracting greenfield investments, not least because of a set of new investor benefits, like "rent-to-buy" schemes allowing investors to buy state companies over time, and tax breaks.

Bosnia's telecoms companies, the Sarajevo-based BH Telekom and HT Mostar, based in Mostar, should be sold in 2009, although Eldar Dizdarevic, an economic analyst and editor of Investor.ba online magazine, said political bickering over control and ownership by the main ethnic parties could make it hard to sell.

"If we are talking about telecom privatisations, everybody will come, everybody wants to buy it. Electro-energy sector -- everybody will come. But for other, less attractive sectors, which need additional work and effort, investors will not come." * For a separate factbox on remaining state assets in the Balkans click on [ID:nLN603909] (Additional reporting by Balkan bureaus) (Writing by Zoran Radosavljevic; editing by Gordana Filipovic and Simon Jessop)