Privatization Status and Performance of Privatized Companies in Egypt

Abstract

The paper defines privatization and cites some reasons for having privatization a phenomenon in the late 80's and 90's in both developed and emerging countries. Next, it gives some examples of privatization deals conducted via the stock market in several developing countries, in their early stages of privatization. Following, the paper summarizes the achievements of the privatization program in Egypt since its inception till end of 2001. It mentions that the main method of privatization adopted by the Egyptian government was IPOs (Initial Public Offerings) via the stock market. It explains that the Egyptian government employed this method to give a boost to its privatization program and to increase the activity on the stock market. The paper then explains the reasons behind the slow down in privatization starting 1997 and what have been undertaken by the government to increase the impetus of the program. Finally, the paper assesses the performance of privatized SOEs, comparing their lastest market prices to their offering prices. The majority of companies had a reduction in their valuations, mainly due to the overall negative macroeconomic circumstances that Egypt has suffered from since 1997, which were later intensified due to the 11th September 2001 events, in addition to, firm specific reasons, which were not addressed in this paper but will be tackled in future research.

Keywords: Privatization Program, Privatization Status, Egyptian capital market, Emerging markets, Experiences of privatization in emerging markets via stock market, privatization in Egypt via stock market, performance of privatized companies in Egypt