Spain shelves lottery sale plan

SPAIN’S ruling Socialists abruptly shelved plans to boost public coffers by selling part of the lucrative state lottery, in the face of tough market conditions, political opposition and banks’ funding concerns.

Bookbuilding was supposed to begin today on the public offering of 30% of Loterias, which could have raised up to €9 billion, but the deal was fiercely opposed by the centre-right People’s Party (PP), which opinion polls show winning a November election.

Loterias, or LAE, known for the Christmas “El Gordo” draw, is the jewel in the crown of Spain’s remaining state-owned assets. It has the largest prize fund of any lottery in the world, last year paying a total of €2.3 billion.

The sale was going to be Spain’s biggest IPO ever, and one of the largest in Europe, as the nation fights its corner of the eurozone debt crisis.

“The decision to pull the IPO was due to a combination of factors, although the background was political,” David Bach, Professor of Strategy and Economic Environment, IE Business School said.

Sources said Spanish banks involved in the sale saw Loterias as a direct rival in their need to bolster capital, by enticing Spaniards to withdraw bank deposits to invest in lottery share.

Up to now, Madrid has consistently met or even exceeded expectations with austerity measures to drag it out of its debt mire. The dropped IPO did not upset Spain’s debt markets, which were more concerned with broader eurozone events.