Commenting on the findings of a survey released by RR Donnelly in its report entitled Government Privatisations and M&A, legal practice Norton Rose Fulbright associate Sara Josselyn said it is of “no surprise” that 86 per cent of respondents project a rise in M&A resulting from government privatisations.
“As governments respond to financial pressures, they will continue to move away from direct ownership and operation of capital-hungry businesses,” Ms Josselyn said.
“Instead, they will look to private sector firms to step forward into the role of owner/operator while governments step back into a regulatory role,” she said.
“The upshot of government privatisation plans? Quality assets entering the market at reasonable if not discounted rates.”
Ms Josselyn also said that given the recent economic crisis, Europe is projected to have the largest government privatisation M&A boost.
“The recent economic crisis has driven European governments to the private market where they are selling burdensome assets at very attractive rates,” she said.
“Asia-Pacific is projected to see the next-largest rise in activity, with the growing private market there eager to expand by way of government asset purchases.”
Ms Josselyn also highlighted that respondents of the survey reported asset use maximisation, infrastructure improvement and economic growth as the “top three motivations” of governments seeking the privatisation of assets.
“Governments looking to stabilise their economies and promote efficiency in the operation of their assets are turning to the private sector where they are finding the necessary capital, as well as abundant amounts of expertise and motivation,” Ms Josselyn said.
