(C) Open Auctions at the BSE & Privatisation of minor stakes through compensatory instruments

It is typical at the open auctions, the price to be a function to a large extend of emotions, especially when there is strong interest in the offered asset and many bidders. Additionally, the open auctions for minority stakes in government entities suggest better satisfaction for the seller through higher prices. On the other side, this price is definitely more transparent and allows less speculations and legal claims.

One of the main designations of the compensatory instruments is to offer compensation to the population and facilitate its participation in the privatization of its preferred businesses. Shall the volume of the offered by the Privatization Agency stakes is commensurable with the available at the market compensatory instruments (KZ & PKB), I expect higher volumes and levels of trading. The quality and the attractiveness of the companies offered, however, remains the chief decision factor for the investors’ behavior.

In case of successful sale of the offered minority stakes, we could expect higher liquidity on the market and diminishing role of the compensatory instruments, if not their practical exhaustion and draining out of the market.