Privatization Trends and Major Deals in 2009

Abstract

What a year 2009 was for privatization worldwide! One year after witnessing massive injections of government capital into financial systems, 2009 saw a record volume of state sales of corporate equity - or, stated more accurately, a record volume of corporate repurchases of government-owned shares. Privatization proceeds totaled a record €184.30 billion ($265.17 billion) during 2009, but bank repurchases of government holdings of preferred shares accounted for €118.46 billion ($168.8 billion) of this record - or almost two-thirds of the total. Besides the bank share repurchases, the global value of 'classic' privatization deals during 2009 totaled only €65.84 billion ($96.29 billion), the lowest such tally since 2004. For the first time ever, the United States was the world’s largest privatizer during 2009, and the €98.70 billion ($140.10 billion) paid to the U.S Treasury by American banks to redeem TARP equity capital injections accounted for over half of the global privatization total for 2009. During the last half of 2009, European banks also redeemed €18.73 billion ($28.75 billion) worth of preferred shares that had been purchased by governments as part of rescue packages during 2008 and early 2009. As in previous years, China led the world in the value of non-bank privatization deals during 2009, with 79 transactions that raised €20.27 billion ($28.05 billion). The second largest non-bank privatizer was also not a surprise: Russia executed 6 transactions and raised €6.59 billion ($9.12 billion), mostly accounted for by three large asset sales.