Privatization Trends and Major Deals in 2015 and 2016

25 Pages Posted: 3 Apr 2017

Date Written: March 31, 2017

Abstract

This article details major privatization deals executed during 2015 and 2016 and surveys trends shaping the privatization landscape worldwide. We document several important facts, including the following: (1) Governments raised a record $319.9 billion (€289.5 billion) through privatization sales worldwide during 2015, substantially more than the $218.8 billion (€166.5 billion) total for 2014 and easily exceeding the previous record of $265.2 billion (€184.3 billion) set in 2009; (2) The global value of privatizations during 2016, $266.4 billion (€241.4 billion) is the second highest on record; (3) Share issue privatizations (SIPs) accounted for over 95% of the total number of privatizations during 2015, and 87% of the total value while auctions, targeted stake sales, convertible bond offerings, and asset sales accounted for the rest. The corresponding figures for 2016 are 93% and 81%, respectively; (4) China was, by far, the leading privatizing country during both 2015 and 2016, raising an astonishing $173.2 billion (€158.4 billion) during 2015, and $148.0 billion (€134.0 billion) during 2016. These Chinese totals represented over half of the worldwide total for both 2015 (54.1%) and 2016 (55.6%). The United Kingdom was a distant second-leading privatizing country during 2015 [13 deals, worth $34.8 billion (€32.1 billion)], while Australia [5 deals worth $25.7 billion (€23.3 billion)] took second place during 2016; (5) The $87.1 billion (€80.0 billion) and $37.8 billion (€34.0 billion) raised by EU governments during, respectively, 2015 and 2016 represented 27.2% and 14.2% of the respective global annual totals. Both 2015 and 2016’s values are far below the long-run average EU share of 37.5% of the global value of privatizations, with 2016 hitting a historic low; (6) There were a relative handful of failed, withdrawn, and cancelled specific privatization sales during 2015 and 2016, but the political turmoil associated with the United Kingdom’s surprisingly successful “Brexit” vote in June — plus global uncertainty leading up to the US presidential election in November — forced a pause in a number of European privatization programs, especially Britain’s; and (7) The large number (903) and value [$586.3 billion (€530.9 billion)] of privatizations executed during 2015 and 2016, coupled with several massive planned sale announcements — especially Saudi Aramco’s mooted $100 billion IPO in 2017 or early 2018, suggests that the massive global privatization wave that began in 2012 continues unabated.

Keywords: Privatization, Government Ownership

JEL Classification: G32

Suggested Citation

Megginson, William L., Privatization Trends and Major Deals in 2015 and 2016 (March 31, 2017). Available at SSRN: https://ssrn.com/abstract=2944287 or http://dx.doi.org/10.2139/ssrn.2944287

William L. Megginson (Contact Author)

University of Oklahoma ( email )

307 W Brooks, 205A Adams Hall
Norman, OK 73019
United States
(405) 325-2058 (Phone)
(405) 325-1957 (Fax)

HOME PAGE: http://faculty-staff.ou.edu/M/William.L.Megginson-

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