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Home > Privatization Alert - November 2009
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Privatization Alert - November 2009
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Focus: Investment in emerging market infrastructure projects is on the way to recovery
A recent report by Public-Private Infrastructure Advisory Facility, tracking trends in private participation in infrastructure projects in emerging markets, reported that investments in new projects recovered in the first half of 2009. At US$49 billion, the level of investment in new projects was slightly above the one during the first half of 2008. By number of projects, however, investment activity was down by 20 percent in the first half of 2009 (compared again with the same period in 2008).
Most of the investment occurred in Brazil, India and Turkey and was driven primarily by large projects. Most projects that raised financing in the first half of 2009 did so through club deals rather than syndications, which had been the norm until the first half of 2008. By region, Latin America and South Asia attracted the highest levels of investments: US$14 billion and US$18 billion in the first half of 2009. Investment activity in Sub-Saharan Africa was US$900 million in the first half of 2009.
The upturn observed should not mask that the crisis is continuing to affect investment in new projects, with many projects being delayed and some even being cancelled. But thanks to the energy sector, investments in infrastructure overall are showing signs of revitalization. Some 42 projects in the energy sector with US$36 billion in investment reached closure in the first half of 2009, an increase of 39 percent compared with the first half of 2008. Still, investment in energy projects remains below the pre-crisis levels. Transport was the sector most severely affected by the crisis, with investment reaching only US$10 billion in the first half of 2009, a decline of 45 percent compared with the first half of 2008 (the number of projects was also down by 30 percent).
The report points out that despite hardship from the crisis, developing country governments continue to remain committed to public-private partnerships and privatization programs. Local banks and multilateral development finance institutions continued to offer critical project financing. However, governments have also had to restructure infrastructure projects to improve their financial viability. Infrastructure sponsors too had to look for new sources of private financing, for example, by listing infrastructure projects in local stock exchanges or using bond markets for large projects.
Status and upcoming transactions
Europe and Central Asia:
Kosovo has launched the forty-first wave of privatizations. Proceeds from privatization Turkey next year are expected to be sizeable and could surpass the target of US$7 billion. Poland has announced the sale of several companies by auction; proceeds from privatization are expected to reach PLN 7.4 billion this year. Bosnia-Herzegovina has also announced the sale of companies by auction.
>> Complete list of regional project opportunities
>> Detailed country analysis by region
Sub-Saharan Africa:
Sierra Leone is proceeding with the privatization (concession) of its ports terminal.
>> Complete list of regional project opportunities
>> Detailed country analysis by region
South Asia: India has approved a plan that requires all state-run companies to have 10 percent of their shares traded publicly. The government is considering reducing its stake in the Steel Authority of India Ltd. and in NMDC Limited.
>> Complete list of regional project opportunities
>> Detailed country analysis by region
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