00:01 Uh,
00:01 good morning,
00:02 good afternoon,
00:03 uh,
00:03 good evening,
00:04 bonjour.
00:05 So before we start the event,
00:06 I would like to remind you that we have simultaneous translation
00:10 from French to English and English to French.
00:12 So if you go on the Zoom app,
00:14 you will find a symbol looking like a globe,
00:16 which if you press on it will allow you to choose.
00:19 The appropriate channel for you.
00:20 Thank you very much.
00:22 Distinguished guests,
00:23 ladies and gentlemen,
00:24 I'm delighted to welcome you today for our launch event
00:27 of the joint report listing state-owned enterprises
00:30 in emerging and developing economies,
00:32 lessons learned for 30 years
00:34 of success and failure.
00:36 My name is Jean Penn.
00:37 I'm the Global director for Finance at the World Bank,
00:40 and it is really my pleasure and my
00:41 honor to be your moderator for today's discussion.
00:44 Policies around SOE investment can be complex.
00:47 Policymakers and practitioners must balance various objectives
00:51 such as raising fiscal revenue,
00:54 improving firm performance,
00:56 democratizing share ownership,
00:58 and supporting capital market development.
01:00 Some may decide listing via the stock exchange are the best way to go,
01:04 especially where countries aim to develop
01:06 their local capital market.
01:08 Our discussion today will look at the issue on
01:10 when and how to use listing as a disinvestment strategy
01:13 from the lens of the capital market development.
01:16 We hope that this report will be a useful guide for you,
01:19 helping you learn more about the SOE listing experiences of other countries,
01:24 which potential development effects on the local
01:26 capital market to expect in the short,
01:28 medium,
01:28 and long term.
01:29 And the condition under which they can be realized and how to maximize impact.
01:34 Before we begin,
01:35 I'd like to sincerely thank our partners,
01:37 in particular,
01:37 Ava Wyman,
01:39 the Ministry of Finance of Luxembourg,
01:40 and the African Securities Exchange Association,
01:43 which have supported us throughout this work.
01:46 And I would like to start by welcoming Mr.
01:48 Arsene Jacobi,
01:49 the Director of Multilateral Affairs,
01:51 Development and Compliance
01:52 in the Ministry of Finance of Luxembourg.
01:55 Arsen,
01:55 on behalf of the World Bank and the Joint Capital Market,
01:58 or JCAP,
01:59 I would like to thank you personally and the Ministry of Finance of Luxembourg
02:02 for your continuous support for our knowledge development activities
02:06 that have allowed us to push the
02:07 knowledge fron frontier on capital markets development.
02:11 It's really a pleasure to have us,
02:13 to have you join us today,
02:14 and I really look forward to your welcome address.
02:17 Ian,
02:17 the floor is yours.
02:20 Well,
02:20 thank you,
02:21 thank you,
02:21 Jean,
02:21 for your kind words.
02:23 Uh,
02:23 mercivo coujean,
02:25 rescier.
02:27 uh,
02:28 distinguished guests,
02:29 ladies and gentlemen,
02:30 it is really a pleasure for me to be here
02:33 today and celebrate together with you the launch of the SOE
02:37 listing report,
02:38 a report that was spearheaded by the World Bank's Joint Capital
02:43 Markets Program in close collaboration as Jean mentioned with Oliver Wyman.
02:48 The African Stock Exchange Associate and the Ministry of Finance of Luxembourg.
02:55 Luxembourg has been supporting the World Bank's capital,
02:59 joint capital markets work under the JCAP
03:01 initiative almost since its start in 2018.
03:06 We are a big supporter of uh JCAP because it aligns
03:11 very well with uh our own development aspirations.
03:15 Indeed,
03:16 we believe that capital markets play a
03:18 fundamental role in economic growth and financial stability
03:22 by allocating local currency and long-term capital
03:26 to projects that help create jobs
03:29 and this not only in the developed world but also in developing economies.
03:35 Our goal,
03:36 given the role of our financial sector
03:38 is to continuously drive financial innovation.
03:42 For example,
03:42 we are the home of the Green exchange,
03:45 the world's leading platform for issuing
03:48 and listing green
03:50 social and sustainable securities.
03:54 The JCAB initiative
03:56 is working to play a similar role in emerging and developing economies,
04:02 that is
04:03 leveraging
04:04 capital markets to promote economic growth
04:07 and jobs creation while maintaining financial stability.
04:12 For example,
04:14 Jacob has worked to develop and leverage capital
04:17 market solutions for affordable housing in Kenya,
04:21 SME financing in West Africa,
04:24 and climate action in Morocco.
04:27 And in doing so,
04:28 it makes a continuous effort to share its experience
04:32 and its knowledge not only across
04:35 its focus countries but across all emerging and developing markets
04:39 with an interest in developing local capital markets.
04:44 It is precisely for those reasons that Luxembourg became
04:48 an early supporter of JCAP and its knowledge work.
04:52 Over the past years,
04:54 we already had a few reasons to celebrate.
04:57 For example,
04:59 late last year with Luxembourg's support,
05:02 JCAP delivered its inaugural Capital Markets conference in Abidjan,
05:07 attended by over 300 international,
05:10 regional,
05:11 and domestic capital
05:13 markets professionals.
05:16 Jacob also produced a policy primer with the help of Luxembourg
05:20 published late last year with the aim to inform and guide
05:24 the public and private
05:26 sector approach to local capital markets development.
05:31 And together with JCAP
05:33 we are working on a new report
05:36 on crowdfunding
05:37 and the efforts of COVID-19 that we expect to come out later this year.
05:43 If JCAP's in-country work is really at the heart of its efforts to help develop
05:50 local
05:51 capital markets,
05:52 then the knowledge work on the JCAP
05:55 that we very much support
05:56 has shaped and informed said
05:59 in-country work.
06:01 Both actually go hand in hand indeed.
06:05 Therefore,
06:06 it is with great
06:08 pleasure and pride that I welcome you here today
06:12 to the launch event of the latest knowledge product
06:15 developed under the JCUB
06:17 initiative,
06:18 the seminar report
06:19 listing state-owned enterprises in emerging and developing economies,
06:25 lessons learned from 30 years of success,
06:29 and of course,
06:29 obviously,
06:31 some failures as well.
06:33 Given the impact that COVID-19 has had on many of the world's stock exchanges,
06:40 the publication of this report seems very timely.
06:45 Many governments are
06:47 once again confronted with the decision on whether
06:50 or not to divest their state-owned enterprises,
06:54 a difficult decision,
06:55 uh,
06:56 indeed,
06:57 uh,
06:57 because of wide-ranging ramifications on economies and societies as a whole.
07:04 Listings as one matters to divest SOEs
07:08 are not an exception,
07:10 and yet they differ from other divestment matters
07:14 in many aspects,
07:15 one being
07:17 the development impact on local capital markets.
07:21 But
07:22 with what confidence can we really recommend SOE listings
07:26 as the divestment solution
07:29 to develop local capital markets in emerging and developing economies?
07:34 What are indeed the conditions of success and which factors
07:38 have to be put in place to ensure
07:41 long-term development impact?
07:44 These are only a few questions or many more.
07:48 This report aims to help policymakers and
07:50 practitioners to better understand SOE listings,
07:54 the potential effects it could have on their local capital markets,
07:58 and under which conditions they can be successful and
08:03 impactful.
08:04 The report also includes a summary of the most recent research
08:09 on the impact of SOE listings
08:12 on the broader economy.
08:15 With the hope to be a true guide in policymakers' difficult decision on when
08:21 and how to use listings as a tool to divest from SOEs.
08:27 Like all governments,
08:28 we fully appreciate the potential sensitivity surrounding this topic,
08:33 but fully support the need for well-informed
08:36 and robust debate based on academic literature,
08:41 case studies,
08:42 and experience,
08:43 both positive and negative,
08:45 and believe that this report will add constructively
08:49 to the discussion.
08:51 In closing and on behalf of the government of Luxembourg,
08:55 I would also like to acknowledge
08:57 and explicitly thank the various partners
09:00 who came together to help produce and make this report possible,
09:05 namely,
09:06 the African Securities Exchange Association
09:10 represented uh by their president,
09:12 Dr.
09:12 Ego Kosi Ain Munde.
09:16 Jespercubien
09:18 pronounce treon.
09:20 And then all the
09:24 Oliver Wyman,
09:25 whose team has worked many hours on this report led by Michael Wagner,
09:31 as well as the World Bank,
09:32 in particular,
09:33 Ms.
09:33 Anika Nealli
09:35 and Mr.
09:36 Anderson Caputo Silva,
09:38 who have been driving
09:40 uh the driving force behind this report since day one.
09:44 So my congratulations to the teams on the launch of the report and we
09:49 look forward to seeing what this report
09:51 and the wider knowledge management efforts of JCAP
09:54 will help to realize in the coming years.
09:57 Thanks a lot.
10:00 Thank you very much,
10:01 Arsen for this uh very important,
10:03 uh,
10:03 setting the scene discussion and,
10:05 and,
10:05 uh,
10:05 as mentioned,
10:06 uh also,
10:07 uh,
10:07 for the very strong support by,
10:09 uh,
10:09 Luxembourg to the whole GECAP initiative and in particular its knowledge work.
10:13 So now I would like to welcome,
10:15 um,
10:15 uh,
10:15 and equally extend a very sincere thank you to Doctor Eddo Kosi Aminunde.
10:20 Uh,
10:20 he is the CEO of the Burs Regional de Valor Mobierre
10:24 and the current head of the African Securities Exchange Association,
10:28 known as ASEA.
10:29 I will try to pronounce that one well.
10:31 Uh,
10:31 Doctor Aminume,
10:32 it is really an honor for me to celebrate with you today,
10:35 uh,
10:35 the launch of the SOE listing report.
10:38 Uh,
10:38 beyond this initiative,
10:39 you are a longtime friend of Jacob,
10:41 and there is a lot of work,
10:43 um.
10:43 At the moment with you and your team,
10:45 and,
10:45 and I hope that we can really engage in many more joint initiative
10:49 to promote the development of Ou's regional capital market,
10:52 in particular.
10:53 So Mr.
10:54 Amenume,
10:54 the floor is yours.
10:55 Mercy.
10:59 Mercy,
11:01 thank you very much.
11:04 Dear Mr.
11:05 Absent Jacobi,
11:07 Director of Multilateral Affairs,
11:09 Development and Compliance,
11:11 Minister of Finance of Luxembourg,
11:14 Dear Mr.
11:14 Jean Penn,
11:15 Director of the Finance Competitiveness and
11:18 Innovation Global Practice at World Bank,
11:22 Dear colleagues,
11:23 CEOs of African exchanges,
11:26 Distinguished
11:27 guests,
11:28 ladies and gentlemen.
11:30 I'm very honored to be with you today.
11:34 On behalf
11:35 of the African Securities Exchanges Association,
11:37 ASEA,
11:39 I would like to welcome you at this virtual ceremony.
11:43 Organized jointly by our association,
11:46 N AFC
11:48 to launch a report on listing state-owned
11:52 enterprises
11:53 in emerging and developing economies.
11:56 First of all,
11:58 I would like to warmly thank our partner
12:01 IFC
12:02 for this initiative
12:04 and its permanent support to the development of capital markets
12:08 on the continent
12:09 through,
12:10 through its various program,
12:12 especially JACAB.
12:14 On behalf of ASEAN members,
12:17 I would like also to congratulate
12:20 Oliver
12:21 Wyman
12:21 and his team
12:23 for this excellent
12:24 and informative report.
12:27 The report
12:28 aims to guide African governments to the right way
12:32 as
12:33 it sheds
12:34 light on the success and failures
12:37 of privatization programs around the world over 30 years.
12:43 A key part of their strategy
12:45 to strengthen their economic growth through capital
12:48 allocation
12:49 of public resources,
12:52 many developed countries adopt more efficient policies
12:56 in terms of management
12:58 of their investment
12:59 in companies on the long-term horizon.
13:02 Privatization.
13:04 is one of the ways to manage public investments,
13:08 allowing government to withdraw from the capital of companies
13:13 while achieving substantial
13:15 capital gain
13:16 and promoting the development of private sector champions
13:20 and local retail
13:22 investors.
13:24 These strategies
13:25 and policies
13:26 should inspire
13:28 African countries.
13:30 From ASEA perspective,
13:32 We have to fill the gap between our continent
13:36 and the other region
13:38 of the world.
13:39 We have to create the conditions
13:42 of successful IPOs
13:44 of state-owned enterprises,
13:47 and develop a large base of retail investors
13:50 in our countries.
13:53 In closing,
13:55 I would like to assure all our partners
13:58 that ASEAN
14:00 will do everything.
14:01 To make these reports
14:03 an impactful tool
14:06 for our continent.
14:08 Our unwavering commitments to play a key role.
14:13 In the long-term economy and social development of our continent
14:17 is at the heart of our strategy.
14:20 With the support of all,
14:22 there is no doubt
14:24 we'll be successful.
14:26 Thank you for your attention.
14:29 Thank you very much,
14:30 Mr.
14:30 Aminunde,
14:31 and,
14:31 and I would like to emphasize the last point that you made,
14:34 uh,
14:34 the importance of developing long-term finance and
14:36 capital market in the African continent,
14:39 which is obviously a very important priority
14:41 for the World Bank Group and JCAP in particular.
14:44 So I'm going to try to slow down how fast
14:46 I speak because apparently I'm going a bit too fast.
14:50 So I will now,
14:50 uh,
14:51 like to turn to Anika Erik,
14:52 who is uh associate Financial Officer at the World Bank Group,
14:56 and Michael Wagner,
14:57 who is senior partner at Oliver Wyman.
14:59 Uh,
14:59 Anika and Michael have worked closely together
15:02 for the past year to develop this report,
15:04 uh,
15:04 with the team,
15:05 but they've been in the lead.
15:06 So thank you very much to the two of you for this,
15:08 uh,
15:09 very hard work,
15:10 and they will now present us with the main findings of the report.
15:13 Anika,
15:14 Michael,
15:14 I look forward to your presentation.
15:21 Thank you,
15:21 John.
15:22 Um,
15:23 I will,
15:24 uh,
15:24 kick this off and then Anika will,
15:26 uh,
15:26 uh,
15:27 take over from me.
15:28 So,
15:29 we will only be able to,
15:31 um,
15:31 present the highlights of the report.
15:34 The report is fairly substantive.
15:35 It's around 80 pages.
15:37 So we don't have room for 80 pages,
15:40 uh,
15:40 uh,
15:40 uh,
15:41 worth of findings.
15:42 But,
15:43 I,
15:43 you know,
15:43 as I said,
15:44 we will go through the,
15:45 uh,
15:45 through the highlights of the,
15:46 of 30 years
15:48 of successes and failure of listing state-owned enterprises in emerging.
15:52 And developing economies.
15:54 We've selected the economies,
15:56 um,
15:57 for,
15:58 uh,
15:58 you know,
15:58 their,
15:59 uh,
15:59 listing activities,
16:00 so it does have,
16:01 um,
16:02 uh,
16:02 uh,
16:02 15,
16:03 um,
16:04 uh,
16:04 emerging and developing economies that,
16:06 that we looked at.
16:07 Could we,
16:07 I have the next slide,
16:09 please.
16:10 The question is,
16:11 why do we,
16:12 uh,
16:12 really care about SOE listings?
16:15 We believe that,
16:16 uh,
16:17 they play or can play a very important role at developing a capital market,
16:22 uh,
16:22 as we will see through the findings of the report,
16:25 but also,
16:26 um,
16:27 SOE assets across emerging and developing economies
16:32 represent about $45 trillion US dollars of
16:35 unlisted,
16:36 um,
16:37 uh,
16:37 assets today.
16:39 And secondly,
16:40 uh,
16:40 development of,
16:42 uh,
16:42 African capital markets as measured by IPO and SPO activity,
16:47 as we can see on the chart here,
16:49 has slowed down over the recent years.
16:51 So we believe it can be
16:53 a strong,
16:53 uh,
16:54 foundation
16:55 for,
16:56 um,
16:56 kickstarting,
16:57 uh,
16:57 the next potential wave of development of capital markets in Africa.
17:02 But I have the next slide.
17:05 The report,
17:06 uh,
17:06 focused,
17:07 as I said,
17:08 uh,
17:08 uh,
17:09 around,
17:09 uh,
17:10 emerging and developing economies.
17:12 Uh,
17:13 as I said,
17:14 we selected,
17:15 uh,
17:15 15 of those.
17:16 The main questions the report
17:18 is looking to address really is
17:20 what has been the impact
17:22 of SOE listings on the development of
17:25 local capital markets.
17:27 Second,
17:27 um,
17:28 what has the,
17:29 what are the preconditions
17:30 to list
17:31 SOEs successfully.
17:32 So here we are looking
17:34 at what are the best methods of listing
17:37 SOEs and what has been the results of,
17:39 of doing so.
17:41 And the third question,
17:42 uh,
17:43 was once listed,
17:45 um,
17:46 what have been the drivers to create a positive impact on
17:50 capital markets development overall?
17:52 So what have been the demonstration effects as,
17:55 as we call them,
17:56 uh,
17:56 if any?
17:57 Um,
17:58 And as mentioned before,
18:00 by,
18:01 by,
18:01 uh,
18:01 uh,
18:02 in the introduction,
18:03 the report,
18:04 um,
18:05 um.
18:06 You know,
18:06 is to provide policymakers with a holistic view.
18:09 That's why we included,
18:11 uh,
18:12 you know,
18:12 the impact,
18:13 uh,
18:13 summary of,
18:14 uh,
18:14 of the impact on key economic variables such as firm performance,
18:19 quality of public goods,
18:20 and so forth.
18:21 We are not attempting
18:22 to do an in-depth study of,
18:24 of these,
18:25 but they are provided
18:26 as important context for policymakers
18:30 to,
18:30 um,
18:31 uh,
18:31 base their,
18:32 uh,
18:32 their decisions around.
18:34 Could I have the next slide,
18:36 please?
18:38 And,
18:38 uh,
18:39 the report has two sections.
18:40 One is,
18:41 uh,
18:42 representing the main findings,
18:44 uh,
18:45 across,
18:45 uh,
18:46 the broader set of,
18:47 uh,
18:47 emerging and developing economies.
18:50 And the second report,
18:51 uh,
18:51 focuses on lessons
18:54 learned or,
18:55 um,
18:56 is,
18:56 is there a business case for Africa?
18:58 What can
18:59 African economies do
19:01 and what are the implications of the findings of the main report?
19:06 Could I have the next slide,
19:07 please?
19:08 So,
19:09 I will only,
19:10 as I said,
19:10 go through some,
19:11 uh,
19:12 some
19:12 important highlights of the findings.
19:14 Um,
19:15 next slide,
19:16 please.
19:18 So first of all,
19:19 um,
19:20 we do find evidence that SOA listings can boost market capitalization,
19:24 specifically in the early.
19:26 Um,
19:27 stages of capital market development.
19:29 When we looked at a sample of
19:32 economies with,
19:33 uh,
19:34 um,
19:35 strong and regular
19:36 listing activity,
19:37 we found that,
19:38 uh,
19:39 the capital markets grew faster
19:41 than economies that,
19:42 uh,
19:43 didn't have uh such activity or only,
19:46 uh,
19:46 listed,
19:46 uh,
19:47 as,
19:47 as smaller,
19:48 uh,
19:49 smaller deals.
19:50 Um,
19:52 The,
19:52 um,
19:53 you know,
19:53 as,
19:54 as I said,
19:54 in early,
19:56 uh,
19:56 stages of development,
19:57 SOE listings can be very important simply because of the size
20:02 of the,
20:03 uh,
20:03 of,
20:03 uh,
20:04 of SOEs and the impact on
20:06 market capitalization,
20:08 and therefore,
20:09 uh,
20:09 a market development.
20:11 And we find where we strategically used and well planned,
20:15 they can basically um kickstart but also sustain the development
20:20 of capital markets.
20:21 But in order to do so,
20:23 uh,
20:24 as we will discuss later,
20:25 a program,
20:26 a programmatic approach has been proven,
20:29 uh,
20:29 uh,
20:29 the best.
20:31 And I have the next slide.
20:34 The demonstration effects,
20:36 um,
20:37 you know,
20:37 that have been found in the empirical literature
20:40 to be important and or to be significant
20:43 in developed economies,
20:45 we didn't find broadspread evidence for those.
20:48 We did find,
20:49 uh,
20:49 in,
20:50 in cases
20:51 where,
20:52 uh,
20:52 In 4 countries,
20:53 which,
20:54 uh,
20:55 which had,
20:56 um,
20:56 uh,
20:57 you know,
20:57 a,
20:57 a strong
20:58 demonstration effects,
20:59 we found,
21:00 uh,
21:00 uh,
21:01 key commonalities,
21:02 which we list here.
21:04 So,
21:04 um,
21:05 those countries were able to develop
21:07 a large domestic institutional investor base.
21:10 They
21:11 had provided good foreign investor access.
21:15 They had a listing pipeline.
21:17 So,
21:17 um,
21:18 as I said,
21:19 a programmatic approach to,
21:20 uh,
21:21 Uh,
21:22 SOE listings
21:24 and,
21:24 um,
21:25 uh,
21:26 uh,
21:26 outside SOEs,
21:28 they also had a large economy with large private
21:31 companies that could,
21:32 uh,
21:33 a list once
21:34 SOEs have paved the way for
21:37 capital markets development.
21:38 But I have the next slide please.
21:42 So,
21:43 um,
21:45 What are the,
21:45 the,
21:46 the drawbacks?
21:47 So we found that uh the biggest risk
21:49 really is related to an inadequate market infrastructure.
21:53 We didn't find any pronounced negative effects,
21:57 uh,
21:57 of,
21:58 of listings,
21:59 but in many cases,
22:00 listings didn't fulfill the the promises
22:03 that they,
22:04 uh,
22:04 uh,
22:05 set out to provide.
22:06 And
22:07 mainly,
22:08 um,
22:08 you know,
22:09 as,
22:09 as we said,
22:10 because of inadequate.
22:11 Market infrastructure,
22:12 uh,
22:13 which,
22:13 uh,
22:14 includes,
22:15 uh,
22:15 um,
22:16 uh,
22:16 exchange infrastructure,
22:18 financial infrastructure as represented by brokerages,
22:21 uh,
22:22 or,
22:22 um,
22:23 a,
22:23 a general,
22:24 uh,
22:24 accounting,
22:25 uh,
22:26 lack of accounting standards and oversight and enforcement,
22:29 which are very important,
22:31 uh,
22:31 to guarantee
22:32 the,
22:33 um,
22:33 uh,
22:33 the value that,
22:35 uh,
22:35 that the listings,
22:36 uh,
22:36 represent.
22:38 We did find that in small markets,
22:40 uh,
22:41 uh,
22:41 GDRs and ADRs or that use GDRs and ADRs as an alternative,
22:46 uh,
22:46 we actually found that,
22:48 um,
22:48 if used prolifically,
22:50 uh,
22:50 there was an,
22:51 uh,
22:52 you know,
22:53 the,
22:53 the effect really was that the local markets
22:55 didn't develop.
22:56 It was more,
22:57 uh,
22:58 supporting.
22:58 Uh,
22:59 the,
22:59 the development of,
23:00 uh,
23:01 foreign markets rather than the local market,
23:03 uh,
23:03 themselves.
23:04 So,
23:04 therefore,
23:05 um,
23:06 we found that the,
23:07 the much better solution
23:09 was to develop local markets and the,
23:12 uh,
23:13 uh,
23:13 the supporting infrastructure
23:15 and the,
23:15 uh,
23:15 the long-term investor base that is critical to support the market.
23:19 But I have the next slide.
23:23 Then,
23:23 um,
23:25 the liquidity impact,
23:26 uh,
23:27 actually for of SOEs,
23:28 we found a,
23:29 a very positive effect on
23:31 the,
23:32 uh,
23:32 their own liquidity.
23:33 So because SOEs are large,
23:35 they represent
23:37 a large,
23:38 um,
23:38 um,
23:39 uh,
23:39 uh,
23:40 stakes or large capital.
23:41 Uh,
23:42 uh,
23:42 as,
23:42 uh,
23:43 investments.
23:44 Therefore,
23:44 we found across the markets that you see listed here,
23:47 uh,
23:48 um,
23:48 uh,
23:48 and for,
23:49 for the individual companies listed here,
23:51 good liquidity over a sustained period of time.
23:55 When we looked at,
23:56 does it increase market
23:58 liquidity overall,
24:01 Uh,
24:01 we only found this to be the case where the,
24:04 uh,
24:04 demonstration effects which we,
24:06 uh,
24:06 by which we mean,
24:08 uh,
24:08 listings of private,
24:10 uh,
24:10 companies,
24:11 so,
24:11 uh,
24:11 follow-on listings of private companies,
24:13 uh,
24:14 uh,
24:14 where that was the case,
24:16 overall market liquidity also improved.
24:18 In other cases,
24:19 the spillover effect
24:21 was,
24:21 uh,
24:21 limited,
24:22 uh,
24:23 or not evident.
24:25 Next slide,
24:25 please.
24:27 And then,
24:28 um,
24:29 finally,
24:29 we looked at,
24:30 um,
24:31 you know,
24:31 can,
24:31 uh,
24:32 uh,
24:33 what does it do to the investor base?
24:35 What investors are important.
24:38 So when we looked at,
24:39 uh,
24:39 uh,
24:40 you know,
24:41 again,
24:41 at,
24:41 at some of the largest IPOs that were very successful in the retail,
24:46 uh,
24:46 investors.
24:47 So demo democratizing share ownership,
24:49 definitely it was achieved in many cases.
24:52 What we found,
24:53 however,
24:54 was if the incentive
24:56 weren't set in the appropriate way,
24:58 i.e.,
24:59 uh,
24:59 incentivized,
25:00 uh,
25:00 retail investors for,
25:02 uh,
25:03 uh,
25:03 short-term,
25:04 uh,
25:04 capital gains.
25:05 Uh,
25:05 uh,
25:06 the,
25:06 the impact was quite dramatic.
25:08 So as soon as the IPOs,
25:09 uh,
25:10 happened,
25:11 like,
25:11 uh,
25:11 you know,
25:11 uh,
25:12 retail investors,
25:13 uh,
25:13 sold their,
25:14 their shares.
25:15 Uh,
25:16 similarly,
25:16 we also found that for foreign investors,
25:19 their participation,
25:20 uh,
25:21 can also be a double-edged sword if If you,
25:24 if markets attracted speculative investors,
25:27 rather than longer term,
25:29 um,
25:29 uh,
25:30 foreign investors.
25:31 So wherever speculative investment
25:33 happened,
25:34 uh,
25:34 we found strong
25:36 impacts on,
25:37 uh,
25:37 volatility with negative
25:39 effects on,
25:40 uh,
25:41 specifically on retail investors,
25:43 uh,
25:43 because once retail investors
25:45 had negative experiences,
25:47 we found it took a long time to,
25:49 uh,
25:49 bring them back into the capital market.
25:52 And I hand over to Annika.
25:55 Thank you very much,
25:56 Michael,
25:57 and good morning,
25:58 good afternoon to everyone.
25:59 In the following,
26:00 I would like to give you now a flavor of the summary analysis
26:04 that looks at the impact of SOA listings on the broader economy.
26:08 Overall,
26:08 the summary analysis comprises of 5 key economic variables,
26:12 and in the next slide,
26:14 I will present you one of them,
26:15 which is the impact of SOL listings on plant performance.
26:19 When we looked at firm performance,
26:21 we found that the impact of SOE listings varies greatly
26:24 depending on several factors including the sector,
26:28 the ownership,
26:29 and the management structure,
26:30 and to some extent,
26:31 the strength of the market institutions.
26:34 If you have a look,
26:34 for example,
26:35 on figure 9,
26:36 you can see that across our case study countries,
26:39 it has especially been the telecom sector,
26:41 oil and gas,
26:42 and financial services that have seen significant
26:45 improvements in the operating earnings post listing.
26:49 Those improvements have often been the result of restructuring,
26:53 including sales of the controlling stakes
26:55 to strategic investors before or shortly
26:58 after the public offering.
27:00 Which for us also highlights really the importance
27:03 of changing the ownership and the management structure
27:06 in order to see firm performance improvements.
27:09 Good examples of those are,
27:10 for example,
27:11 Kenya Airways,
27:12 SONATE,
27:13 and BMCE or what is now known as Bank of Africa,
27:16 all of which were sold to strategic investors in combination with being listed.
27:21 Strong
27:22 market institutions such as the exchanges,
27:25 corporate governance or reporting standards
27:27 can play in a supportive role as well.
27:29 But what we found is that those effects usually tend to
27:32 be significantly weaker than those that can be achieved by privatization.
27:37 Having said that,
27:38 there are some cases where governments shouldn't or simply
27:42 don't want to privatize
27:44 fully their SOEs.
27:45 So in those cases,
27:47 SOE listings can offer a second best solution
27:50 because they can help governments to improve the transparency
27:53 and the corporate governance of their SOEs
27:56 and ultimately potentially also support firm performance.
28:00 Next slide,
28:00 please.
28:03 I think to conclude what Mike and I just said,
28:06 if it is fair to say that
28:07 SUO listings can significantly boost capital markets development
28:11 and provides certain benefits to the broader economy,
28:14 but only under certain conditions.
28:17 Next slide,
28:18 please.
28:18 Thus the two remaining questions
28:21 are
28:22 when should you list and what conditions do you need to have in place?
28:25 And in order to answer that question,
28:27 our report has looked at the preconditions for success
28:31 and what we call the drivers of impact.
28:33 When we talk about success,
28:35 we really simply mean that the SOE listing has been absorbed and settled
28:39 in the market and trades at a liquidity that is sufficient for,
28:43 for investors to come in and out.
28:45 That's it.
28:47 On the other hand,
28:47 when we talk about impact,
28:49 we really talk about all the parameters that Michael just referred to,
28:53 including,
28:54 uh,
28:54 market capitalization and also the breadth of the investor base,
28:58 and we look at it from a short term,
29:00 but also from a long-term perspective.
29:03 Now,
29:03 regarding
29:04 the conditions of success,
29:06 we actually found that there are relatively few,
29:08 and there are 3 of them that you can see on the slide,
29:11 I would like to highlight to you now.
29:13 The first one is the need for institutional competence
29:16 and competitive and transparent processes,
29:19 which will be key to provide
29:20 divesor and listing processes with sufficient credibility
29:25 to attract reputable investors and also to ensure public support.
29:30 The second condition is the strength of the capital markets infrastructure,
29:35 which includes well capitalized brokers,
29:37 a strong trading,
29:39 clearing,
29:39 and settlement infrastructure that can handle large volumes of transactions,
29:44 and a well-staffed
29:46 and independent regulator that can enforce good market conduct.
29:51 Lastly,
29:52 the third condition I would highlight is the choice of the SOE.
29:56 Not every SOE can and should be listed.
29:58 SOEs up for listing should have a certain size,
30:01 and most importantly,
30:02 they have to be profitable.
30:05 Next slide,
30:05 please.
30:07 Finally,
30:08 uh,
30:09 concerning the,
30:09 the drivers of impact,
30:11 the list is significantly longer.
30:13 We show you a few here,
30:14 but for the sake of time,
30:16 I only want to highlight two of them.
30:18 The first one is the need for having a relatively large SUE listing pipeline,
30:22 which Michael also referred to already.
30:24 And it is really because
30:26 single interventions
30:28 almost never really create markets.
30:30 To achieve market impact,
30:32 you do need
30:33 several SOEs that can be sold gradually over time
30:38 for multiple listings,
30:39 and it takes time and repetition
30:41 for people to learn in the industry and also for an industry to develop overall.
30:47 Second and lastly,
30:48 I want to highlight the need for a large domestic institution investor base,
30:53 because it is really
30:54 that
30:55 investor base,
30:56 the pension funds and insurance companies
30:58 that can absorb large proportions of the listing
31:00 and provide a minimum level of price stability.
31:04 That's what we have seen,
31:05 it's really those countries that have
31:07 uh had
31:08 a big capital markets development effects from the SOA listings,
31:11 they have had undertaken pension fund reforms before they have uh
31:16 um sold a significant amount of the SOA listings on the local exchange.
31:21 Thus,
31:22 given those preconditions and drivers,
31:24 I think the main point that I really want you to take away from this section
31:28 is that successful and impactful SOE listings
31:31 are usually integrated into a larger effort to reform the public sector.
31:37 And within,
31:38 within that reform agenda,
31:40 listings may be one of the top
31:42 objectives of a government,
31:43 but they usually are
31:45 one of the last steps for them to take.
31:48 And on that note,
31:49 I would like to thank you everyone for the attention
31:51 and next slide,
31:52 please,
31:53 and urge you to visit our website and download the report and read it.
31:56 Thank you very much.
31:57 Over to you,
31:58 Jean.
32:00 Thank you very much Anika and Michael,
32:01 and I saw someone ask where can we find the report,
32:04 so we are going to circulate the link so that you can access it,
32:08 uh,
32:08 and,
32:08 and please be assured that the presentation is just an appetizer on the report,
32:12 which covers uh really much more ground.
32:14 They focus on the key issues.
32:16 And there is a lot of work and time being spent on this and,
32:19 and very successful outcomes.
32:20 So thank you very much
32:21 Anika and Michael again uh for this work and the presentation,
32:25 which I think sets the scene very well
32:27 for our next phase of this morning,
32:29 which is,
32:30 uh,
32:30 which is a panel discussion.
32:32 Um,
32:32 and I think,
32:33 uh,
32:33 your,
32:33 your,
32:33 the presentation of your key findings highlights that actually a couple of
32:37 pretty difficult questions to look at,
32:40 uh,
32:40 when considering on how to,
32:42 um,
32:42 leverage the listing of SOEs for capital market development.
32:46 So let me highlight three of them.
32:48 Um,
32:49 one,
32:49 if listing can support the development of local capital market,
32:53 but they have a less strong effect on firm performance,
32:56 what role can they play in the current
32:58 environment where many SOEs will need a restructuring?
33:02 Uh,
33:03 second,
33:03 if domestic institutional investors are important,
33:06 not only to increase the potential of creating demonstration effect
33:10 but also to reduce risk of excess volatility in the stock market,
33:14 what could the government do to make SOE listing
33:17 more attractive to those domestic,
33:19 uh,
33:19 institutional investors?
33:21 Third question,
33:22 given that SOE listing requires all
33:24 these precondition or pre-requirement in place,
33:27 how closely should they be integrated in other reforms?
33:30 So what's the sequencing and integration?
33:33 What's,
33:33 uh,
33:33 how,
33:34 uh,
33:34 are there any second best solution
33:37 where certain preconditions are met but not others,
33:39 and how can we still,
33:40 um,
33:41 maximize the impact of SOEDity.
33:44 So to help me answer some of these questions,
33:46 I'm,
33:46 I'm very happy to have,
33:47 uh,
33:47 4 speakers on our panel today,
33:49 all of them with a lot of experience
33:51 with SOEDine coming from a very different perspective.
33:55 So I'm going to quickly introduce the four of them.
33:58 You have their full bios available on the website and,
34:01 and the,
34:01 uh,
34:02 the background for this session,
34:04 uh,
34:04 and then that will leave us more time for the discussion.
34:07 So let me start with uh Mrs.
34:08 Martha Cellier,
34:09 uh,
34:10 she's the Special secretary to the Investment Partnership
34:13 Program of the Ministry of Economy in Brazil.
34:16 Then we will have Doctor Mohammed Farid,
34:18 executive chairman of the Egypt Egyptian Stock Exchange,
34:22 and he's also the chairman
34:24 of the Federation of the EuroAsian Stock Exchange.
34:28 Mr.
34:29 Abel Sithol,
34:30 who is the CEO of the Public Investment Corporation in South Africa,
34:34 and finally,
34:35 uh Mr.
34:35 Nick Paget,
34:36 who is the co-founder and managing director of Frontoa Capital.
34:41 Um,
34:41 and as,
34:42 as we start the discussion,
34:43 please do not hesitate to continue to share your question on the,
34:46 on the chat.
34:47 Uh,
34:47 hopefully we'll have,
34:48 uh,
34:48 enough time at the end,
34:50 uh,
34:50 to come back on them and,
34:51 and ask them,
34:52 uh,
34:52 to the panelists.
34:53 So we will try to have two rounds of questions,
34:56 uh,
34:56 so I look forward to hearing from our panelists.
34:59 Let's also make sure that we manage collectively time,
35:02 uh,
35:02 so that we have a bit of,
35:03 uh,
35:03 question and answer,
35:04 uh,
35:05 at the end.
35:05 Mrs.
35:06 Cellier,
35:07 let me start with you.
35:08 So,
35:08 uh,
35:09 as the Special secretary to the
35:10 Ministry of Economy Investment Partnership Program,
35:13 you are now supporting the implementation
35:15 of Brazil's very ambitious privatization program.
35:18 How does Brazil's past expense in SOE
35:20 listing influence your current investment decision,
35:24 uh,
35:24 including of large SOEs such as Electrobras
35:27 or the postal services chorios?
35:29 What,
35:30 how do you
35:31 link together the past and the experience and what's happening today?
35:34 Marta,
35:35 the floor is yours.
35:36 Thank you so much.
35:38 Um,
35:38 it's a pleasure to be here.
35:40 I'd like to,
35:41 um,
35:42 congratulate first,
35:44 um,
35:44 this work,
35:45 uh,
35:46 of the,
35:46 the World Bank together with uh Oliver Wyman,
35:49 the government
35:50 of Luxembourg.
35:52 Um,
35:52 it was very interesting
35:54 reading the Paper and,
35:56 and understanding that its main conclusions.
35:59 As you know,
36:00 Brazil
36:01 is going through a large privatization program right now
36:05 and we already have uh a history of important SOEs that have been
36:10 uh divested or privatized in the past.
36:15 So we can say Brazilian um capital market um
36:19 is reaching,
36:21 let's say maturity uh each time
36:24 more enterprises are looking for,
36:27 for capital market here in Brazil.
36:29 Uh many reasons for that,
36:31 I guess the past SOEs that have been privatized uh basically in the 90s.
36:37 In Brazil
36:38 have helped a lot to develop capital markets uh here in Brazil.
36:43 You mentioned,
36:44 uh,
36:44 the demonstration effect and I guess somehow,
36:48 uh it has uh been important here in Brazil as well to have
36:52 SOE listings in the past,
36:54 encouraging
36:55 uh other SOEs and other,
36:58 um,
36:59 private enterprises to look For capital markets,
37:02 uh,
37:02 you know,
37:03 in Brazil
37:04 we have not only,
37:05 uh,
37:05 federal government SOEs but also SOEs at the state levels,
37:10 so we see how one process can influence others in terms of decisions reaching,
37:16 uh,
37:16 capital markets.
37:17 As an example,
37:19 uh,
37:19 we have the,
37:20 uh,
37:20 distribution of energy sector here
37:23 in.
37:23 Brazil,
37:24 where um each time less SOEs are found,
37:28 meaning that governors are looking for IPOs,
37:32 are looking for privatizations
37:34 to get the right investments,
37:36 uh,
37:37 to deliver the services to the population.
37:39 Today we'll have another privatization of a distribution energy company,
37:44 North Brazil in the state of Amapa.
37:47 Uh,
37:47 one of the last uh enterprises that are still public in this sector,
37:52 uh,
37:52 here in Brazil.
37:54 So,
37:54 um,
37:55 this,
37:55 uh,
37:56 development of the,
37:57 the capital markets in Brazil,
37:59 uh,
38:00 in my view is,
38:02 um,
38:02 natural since we have started in the past with great SOEs
38:07 and And we've been changing also,
38:09 also the role of our developing bank,
38:12 the BNTS
38:13 that before was very important um
38:16 to acquire those shares and to make part
38:20 of the absorption in capital markets
38:23 and today,
38:24 each timeless,
38:25 each time the bank is helping more.
38:28 Um,
38:28 in financing infrastructure and other sectors and also
38:32 helping us structure the privatizations with the feasibility
38:36 analysis and all that needs to be done,
38:38 uh,
38:39 to move forward with this attraction of private investments
38:42 agenda.
38:43 Um,
38:44 something we can see also,
38:46 uh,
38:46 that is interesting.
38:48 Is that Brazil
38:50 has reached um its lowest interest rate uh right now.
38:54 So
38:55 in 2020,
38:56 we see uh the number of IPOs growing a lot even though we had a difficult year
39:02 with uh coronavirus
39:04 and,
39:05 uh,
39:06 we realized that when people get less,
39:09 let's say safer income revenues from other portfolios because
39:14 the investment rate is so low,
39:16 then
39:17 People naturally look for
39:19 uh more um investment alternatives in capital markets.
39:23 So
39:24 we have reached a record in 2020,
39:27 uh,
39:27 compared to the years before.
39:29 We didn't see the number of IPOs and the volumes
39:32 we had in Sao Paulo Stock Exchange here in Brazil
39:35 since
39:36 maybe 2010
39:38 when we had a very important capitalization from Petrobras
39:42 and from then on,
39:43 uh,
39:43 last year was the
39:45 For sure,
39:46 the,
39:46 the most relevant year we had almost
39:48 $25 billion capitalization
39:52 uh in the Sao Paulo Stock Exchange
39:54 and we reached
39:56 almost 3.5 million Brazilians,
39:59 individuals
40:00 that now are looking for this type of,
40:02 um,
40:03 uh,
40:03 investment
40:04 and one of the main reasons is,
40:06 um,
40:07 the low interest rate that we have right now in Brazil.
40:10 Also the fact that I guess coronavirus had
40:13 An interesting uh effect on enterprises looking for more financing,
40:19 uh,
40:19 not only public banks,
40:21 each time less public banks and more
40:23 capital markets to go through the crisis
40:26 and also to invest in technology and other alternatives that were,
40:30 uh,
40:31 perceived as very important to go,
40:33 uh,
40:33 through the,
40:34 the crisis.
40:35 We also saw movement
40:36 of,
40:37 um,
40:37 acquiring uh Competitors here in Brazil,
40:41 uh,
40:41 because of the crisis.
40:42 And another thing you mentioned is,
40:45 um,
40:45 the listing pipeline,
40:47 and that,
40:47 that's where
40:48 Brazil has a lot to present.
40:50 Not only we have been through
40:52 many divestments of SOEs and privatizations in the past,
40:55 but we have
40:56 a huge pipeline of very important enterprises
41:00 such as Eletrobras that is a giant for energy generation and energy transmission.
41:05 Here in Brazil,
41:06 we have just approved,
41:07 uh,
41:08 this week
41:09 the provisional measure in Congress that allows us to go
41:13 forward with the capitalization of Eletrobras that will happen,
41:17 uh,
41:17 we hope in the beginning of next year,
41:19 and,
41:20 uh,
41:20 we'll go through a model of capitalization where,
41:23 uh,
41:24 the federal government doesn't subscribe,
41:27 uh,
41:27 so we lose control of the company and also
41:31 Um,
41:31 uh,
41:32 we,
41:33 uh,
41:33 guarantee that no,
41:35 um,
41:36 individual will have more than 10% of the company,
41:39 so we're spreading,
41:40 uh,
41:41 the,
41:41 this,
41:41 um,
41:42 um,
41:43 voting power
41:45 in the,
41:45 the energy sector.
41:47 We have the National Post,
41:49 uh,
41:49 that we're discussing in Congress right now also
41:52 and structuring,
41:53 uh,
41:54 the privatization of the National Post here in Brazil.
41:57 Uh,
41:57 many enterprises from the transportation sector,
42:00 ports,
42:01 uh,
42:01 railways,
42:02 um,
42:03 basic sanitation that we have approved just recently,
42:06 a new law in Brazil to help privatization of SOEs
42:09 at the state level and also concessions and PPPs.
42:13 Telecom,
42:14 the sectors,
42:15 the,
42:15 the list of sec sectors is huge
42:18 and Brazil is moving very fast with an important pipeline of SOEs,
42:22 divestments and privatizations.
42:27 Thank you very much Martha for this overview and and lessons
42:30 learned and you have quite a bit in the pipeline,
42:32 so we may come back to that uh in some of the follow-up question.
42:35 So let me now turn to uh to Mohammed Faried.
42:38 So as,
42:39 as the chairman of the Egyptian Stock Exchange and also of the Federation.
42:43 But also as a former uh uh senior official in the Ministry of Investment,
42:47 you may have seen
42:48 good and less good
42:49 in terms of SOE listing.
42:51 So uh from your experience,
42:53 what are the key benefit and risk of SOE listing
42:56 for local capital market and how do you approach that in the Egyptian context?
43:00 Mohamed,
43:01 thank you.
43:02 Thank you.
43:03 Uh,
43:04 well,
43:05 uh,
43:05 first of all,
43:06 I would like to thank you,
43:07 uh,
43:08 to thank the World Bank,
43:09 Oliver Wyman and definitely my colleague and friend Doctor Edo,
43:13 uh,
43:13 and his chairmanship for ASEA for this report.
43:17 Uh,
43:18 I believe it's a very timely
43:20 and important report to take into consideration,
43:23 uh,
43:23 and to start,
43:24 uh,
43:24 I would say boosting in,
43:26 uh,
43:26 the SOE's listing again
43:28 in that regard.
43:29 But before
43:31 Tackling your,
43:32 uh,
43:32 your question or trying to tackle your question,
43:34 your difficult one,
43:36 John,
43:36 I would assume
43:37 would be,
43:38 uh,
43:39 would be to thank Martha for the extensive introduction about Brazil.
43:44 I think all of us now should think of closing
43:46 their markets and go to Brazil and invest over there.
43:49 So,
43:49 uh,
43:50 so thank you,
43:50 Martha for this extensive,
43:52 I would say,
43:53 uh,
43:53 promotion for,
43:55 for the activities and reforms you have been taking place.
43:58 Um.
44:00 Uh,
44:00 I,
44:00 I believe we had two waves of SOEs listing in Egypt,
44:04 uh,
44:05 and both of them were coupled with broader,
44:08 I would say macroeconomic reforms,
44:10 uh,
44:10 and this is one of the key lessons which is,
44:13 uh,
44:13 not the preconditions for listing of SOEs,
44:16 but the context within which you are listing
44:19 the state-owned enterprises in the market.
44:20 The first wave,
44:22 uh,
44:22 in Egypt was in 1992,
44:24 1993,
44:25 uh,
44:25 with the reactivation,
44:27 re-inauguration of the capital markets.
44:30 Uh,
44:30 plenty of listings took place through the market
44:33 and here maybe we're going to discuss the
44:34 type of listing itself because it made a difference
44:37 in the long term regarding its performance.
44:41 And all of this was coupled with
44:43 an IMF backed uh reform
44:46 to put the uh macroeconomic policy in place
44:50 in terms of monetary policy and how you deal
44:52 with your foreign exchange reserves and so on
44:54 and so forth and your balance of payments imbalances
44:57 and as well dealing with your fiscal imbalances
45:00 that was present at that point in time.
45:02 And during that period it was uh uh one of the golden eras
45:06 uh whereby we have seen activity rising more than
45:10 1,000% in the market.
45:12 Uh,
45:12 we've seen investors participating,
45:15 uh,
45:16 institutional,
45:17 individual investors and so on and so forth.
45:19 And then we have,
45:21 uh,
45:21 I would say a hiccup,
45:22 uh came uh to the market when we have seen the Asian crisis in 1998,
45:28 in 1999.
45:30 And this slowed down a little bit,
45:32 the SOEs.
45:33 One of the key pillars
45:35 that maybe we can as well mention
45:37 is to have a continuum of listings.
45:40 I believe
45:41 Arika mentioned
45:43 to have multiple listings rather than one incident or one event.
45:47 Because I believe one of the reforms that was with the aim
45:51 of
45:53 listing all or,
45:54 or basically privatizing all state-owned enterprises in
45:57 1992 was to create a special ministry
46:00 for all public sector companies,
46:02 state-owned enterprises under one ministry.
46:06 For the sake of portfolio management and active management
46:09 and hence should it
46:11 This ministry has done its proper role.
46:14 If you ask my opinion,
46:15 now it should have been vanished.
46:17 It shouldn't have been present
46:18 nowadays,
46:19 but it is still present
46:20 with some,
46:21 I would say 9 to 10 holding companies
46:23 underneath it with 150 something or 130 something
46:27 companies.
46:27 But of course we floated
46:29 something more than this amount during the 1992 era,
46:32 and then the Second era,
46:34 uh,
46:35 post,
46:36 I would say the Asian crisis and the dot-com bubble,
46:38 uh,
46:39 in 2001,
46:40 started in 2003.
46:41 Uh,
46:42 again,
46:42 we have seen a rise
46:43 in state-owned enterprises listing
46:46 with three or four listings that were quite sizable,
46:49 and the biggest one was Telecom Egypt at that point in time in 2000 and end of 2005.
46:56 But again,
46:56 this was coupled with a wider
46:59 uh fiscal policy reforms,
47:01 monetary policy reforms,
47:02 and financial sector reforms,
47:04 aggregation of companies increasing the capital,
47:06 capitalization of financial institutions,
47:08 insurance companies,
47:09 and so on and so forth.
47:10 And again we have seen at that point of time,
47:13 uh,
47:13 market capital to GDP exceeding the 100% mark,
47:16 reaching to 120% if I'm not mistaken at.
47:19 Points of time,
47:19 daily trading uh was uh quite significant compared to the previous figures.
47:25 And again,
47:26 some crisis come and here
47:27 is the point that,
47:28 that,
47:29 uh,
47:29 that we need to focus on in 2008,
47:31 uh,
47:32 slowing down in listings,
47:34 slowing down in follow-on listings because some of
47:37 the companies that were listed in 2004,
47:39 2005,
47:41 the aim was not
47:41 To,
47:42 uh,
47:42 to,
47:42 uh,
47:43 to be satisfied
47:44 with the 20 or 25% being listed on the market.
47:47 The aim was to,
47:48 to test the market with a 20%
47:51 free float,
47:51 but then to increase it to 40% and 50% and 60%
47:55 as you move along,
47:55 but this did not happen
47:57 because of the,
47:57 of course,
47:58 the valuations uh post the financial crisis
48:00 and maybe something and of course the Eurozone
48:03 problems.
48:05 But,
48:06 and then maybe something pertinent to,
48:08 uh,
48:08 pertinent to Egypt which is the uh
48:11 uh uh I would say instability that occurred in 2011,
48:16 uh,
48:16 the revolution and its aftermath and instability,
48:19 whether on the political and economic front.
48:22 What distinguishes,
48:23 I would say,
48:24 uh,
48:24 the periods and the listings would be the type of listings.
48:28 And I don't know if I should be stopping here or shall I continue,
48:31 so you,
48:32 you stop me,
48:32 John,
48:32 whenever you want me
48:33 to stop talking.
48:34 I'll,
48:35 I'll stop talking in that regard.
48:37 OK,
48:37 you sit down one or two minutes so that we have enough time,
48:39 but please finish your thought and then we'll turn to the colleagues.
48:43 OK.
48:43 Uh,
48:44 so we have 3 to 4 conditions if we want to see a sustainable,
48:49 I would say,
48:49 impact for SOEs on the markets.
48:52 Number 1 is are the preconditions,
48:53 as you mentioned,
48:54 or the macroeconomic conditions.
48:55 You cannot work
48:56 in and,
48:57 and,
48:58 and list.
48:59 I would say companies in a period where,
49:01 whereby you have a very slow down,
49:03 uh,
49:03 economic performance or a slow economic performance.
49:05 People are not optimistic and so on and so forth.
49:08 So
49:08 having your macroeconomic,
49:10 uh,
49:10 uh,
49:10 I would say picture in place is,
49:12 is quite,
49:13 it's quite very important.
49:15 The second aspect would be the size of the IPO itself and its type.
49:20 11 of the key drivers for the full-on success of the,
49:25 uh,
49:25 uh,
49:25 privatized companies
49:26 was the size of the issue.
49:28 We had two situations in 1994,
49:30 2 state-owned retail,
49:33 uh,
49:33 sorry,
49:34 uh real estate developers.
49:35 Uh,
49:36 one has floated 75% of its ownership and the other one has floated the 20 or 25%.
49:43 If we see those companies now,
49:45 the difference is huge between the one that you floated
49:48 75% and the one that you floated 25% only.
49:52 Uh,
49:53 and hence this is a very important point.
49:55 If we are really aiming to have
49:57 a real,
49:58 uh,
49:58 I would say transformation of the real economy
50:00 and a real impact on companies,
50:03 we need to
50:04 accept the fact,
50:05 uh,
50:06 that you need to go for very sizable listings,
50:08 uh,
50:09 a very significant free float in the market.
50:12 And
50:13 be happy with the incremental capital gains that
50:16 you're going to benefit by having the company
50:19 growing by,
50:20 by,
50:21 by,
50:21 by multiples of its current size,
50:24 given
50:24 the proper management,
50:25 proper governance,
50:26 uh,
50:27 and sufficient
50:28 free flow
50:29 that would allow institutional investors to come
50:31 and participate
50:32 without killing the secondary market trading in the market.
50:36 In some other markets when you get to see this,
50:38 even if they have,
50:39 uh,
50:39 I would say sizable IPOs,
50:41 if your institutional base is dominant above
50:45 the retail base,
50:47 you kill secondary market trading.
50:49 So the concept of,
50:50 of,
50:50 of,
50:51 uh,
50:51 I would say of the belief
50:53 that retail trading is only a volatility,
50:56 uh,
50:56 a driver and is not beneficial.
50:59 This is very wrong and it is,
51:00 and it would kill the secondary market trading in the market
51:03 and hence would not entice
51:05 institutional investors to enter into this because they know
51:08 they cannot go get out or in of this investment
51:10 without proper secondary market trading.
51:12 So it's a fine balance
51:14 between what
51:15 is the size for retail investors
51:18 and what is the size
51:19 for institutional investors.
51:22 Um,
51:22 as we have moving,
51:23 uh,
51:24 historically,
51:25 uh,
51:25 it was a big portion for retail investors.
51:27 Nowadays it is more towards institutional investors and
51:31 probably that's why we get to see liquidity,
51:33 not as,
51:34 uh,
51:34 as,
51:35 as it has been high,
51:36 uh,
51:37 as it used to be,
51:38 uh,
51:38 during the periods of
51:39 earmarking significant IPOs or significant portion of the IPO
51:43 to,
51:43 um,
51:44 retail investors.
51:45 Talking about what we're doing now in,
51:48 in,
51:48 in very.
51:50 Yeah,
51:50 quickly,
51:51 to conclude,
51:52 sure,
51:53 if you don't want me,
51:53 I can,
51:54 I can stop here and no,
51:55 no,
51:55 please,
51:55 your,
51:56 your word of conclusion.
51:57 Uh,
51:59 what is being happening now
52:01 that we have something like,
52:02 uh,
52:03 more or less the same lines like Martha,
52:05 Martha mentioned,
52:06 uh,
52:06 we have a pipeline of IPOs that has been announced by the Ministry of Finance,
52:10 uh,
52:11 privatizing state-owned enterprises.
52:13 In different fields.
52:14 But the challenge nowadays
52:16 that
52:17 the new,
52:17 I would say millennia and new investors
52:20 uh are not looking to traditional
52:22 in uh investment types.
52:24 They're looking more for
52:26 the fintech uh approach but then comes the problem
52:29 of valuations because the evaluation of these types of,
52:32 of,
52:32 of companies
52:33 are not based on the tradition.
52:35 Approaches of
52:36 cash flow projections discounting it,
52:37 it's a multiple and those multiples are quite uh different than,
52:41 uh,
52:42 than the,
52:42 the,
52:43 the,
52:43 the,
52:43 the normal multiples that we're looking at.
52:46 However,
52:46 we have a significant pipeline
52:48 that we're pushing with the government
52:50 start uh eagerly
52:52 uh IPO in the market,
52:53 in the insurance sector,
52:54 in the fintech sector and payments.
52:57 In the oil and gas as well sector and so on and so forth.
52:59 So we have significant and in the,
53:01 in the sports as well.
53:02 So that,
53:03 this is one of the new areas we were trying to privatize uh the sports,
53:08 uh,
53:09 the sports companies,
53:10 especially football companies like El Ali and and Malik and so on,
53:13 so that everyone can participate in a democratization of capital basically.
53:19 Thank you very much,
53:20 Mohamed,
53:20 and thank you for the expense and,
53:21 and also your passion in in sharing uh Egypt's experience.
53:25 So let me,
53:25 let me now turn to the other side of uh of the equation.
53:29 And,
53:29 uh,
53:30 and to Abel uh Sithold,
53:31 so you,
53:31 you're the new CEO of uh South Africa
53:34 Public Investment Corporation and you were a senior official also
53:37 previously in the government employee pension fund.
53:40 So you have a very good understanding
53:42 of the risk return appetite,
53:43 the investment strategy of pension fund,
53:45 and we just discussed
53:46 the balance between institutional investors and retail investors.
53:50 So what do you think is the general risk appetite
53:52 of domestic pension fund for SOE and privatized company and.
53:56 What are the criteria that,
53:57 uh,
53:57 uh,
53:58 according to which you will evaluate whether to invest
54:00 or not in an SOE or a prioritized company?
54:03 So what,
54:04 what's the other side of the equation and how do you see things going forward?
54:09 Aben,
54:09 the floor is yours.
54:12 Again,
54:13 uh,
54:14 just to start by,
54:15 of course,
54:15 uh,
54:16 expressing the,
54:17 the usual protocols of acknowledging and thanking,
54:20 um,
54:20 uh,
54:21 the,
54:21 the colleagues who worked on,
54:23 on the reports.
54:24 Uh,
54:24 I've had the opportunity of reading,
54:26 reading some of the,
54:27 um,
54:28 summaries,
54:28 and it's been extremely useful and will continue to be useful,
54:32 uh,
54:32 into the future.
54:32 So thanks for those who,
54:34 of course,
54:34 um,
54:35 uh,
54:35 have spent the time to do the,
54:37 the hard work.
54:38 Uh,
54:39 and of course for the World Bank to making,
54:41 uh,
54:41 and,
54:41 and IFC to making this platform,
54:43 uh,
54:44 possible and,
54:45 and,
54:45 and the colleagues who have joined the conversation.
54:48 Um,
54:48 I'm,
54:49 of course,
54:49 gonna speak from a South African context and,
54:51 and,
54:51 and ours is,
54:53 is an environment that,
54:54 um,
54:55 uh,
54:56 largely from a capital market point of view,
54:58 is,
54:59 is relatively mature.
55:00 In,
55:01 in,
55:01 in that um we've had a,
55:03 a stock exchange in South Africa going uh back to the 1887s
55:07 when gold was first discovered and there was a lot of trading
55:11 and that created a very strong and robust capital markets in the private sector.
55:16 Um and when the conversation around
55:18 listing state-owned enterprises um
55:22 um happened in the 1990s,
55:24 it happened in an environment where there was already
55:27 a very um
55:29 Uh,
55:29 tried and tested,
55:30 uh,
55:30 tested capital markets,
55:32 um,
55:33 um,
55:33 uh,
55:33 in South Africa.
55:34 So that,
55:34 that's one in,
55:36 and that has continued and has been the case,
55:38 um,
55:38 up to today that we do have a,
55:40 a,
55:41 a,
55:41 a,
55:41 a mature,
55:42 um,
55:43 um,
55:44 uh,
55:44 market in,
55:44 in capital markets in the one side.
55:47 Um,
55:47 the,
55:47 the,
55:48 the,
55:48 the,
55:48 the topic of today,
55:49 of course,
55:49 is,
55:49 is listing,
55:50 uh,
55:51 but,
55:51 um,
55:51 uh,
55:52 state-owned enterprises have access
55:54 and,
55:54 and contribute to capital markets beyond just,
55:57 um,
55:58 uh,
55:58 listing.
55:58 So in,
55:59 in,
55:59 in,
55:59 in the context of South Africa,
56:01 most of
56:02 our major state-owned enterprises might not be listed,
56:05 but,
56:05 uh,
56:06 play a very significant role in capital markets.
56:08 So
56:09 if you look at,
56:09 for instance,
56:10 our
56:11 Um,
56:11 our telecommunications,
56:12 uh,
56:13 uh,
56:13 company that was subsequently,
56:15 uh,
56:15 listed and you look at our uh power
56:18 uh producer,
56:19 Eskom,
56:19 you look at our,
56:21 uh,
56:21 a logistics company,
56:23 uh,
56:23 Transnet.
56:24 Um,
56:24 they're not listed,
56:25 so,
56:25 so Telkom was listed,
56:26 but the other two were not listed,
56:28 but actually already play a significant role in
56:30 the capital markets in the sense that,
56:32 um,
56:32 they actually don't have equity.
56:34 That,
56:35 um,
56:35 uh,
56:36 investors can participate in,
56:38 but can actually participate,
56:39 um,
56:39 uh,
56:40 in the bond markets because
56:41 these institutions are significant,
56:43 uh,
56:44 bond issuers,
56:45 uh,
56:45 which are traded,
56:46 um,
56:46 uh,
56:47 in,
56:47 in,
56:47 in the capital markets,
56:48 uh,
56:49 as well.
56:49 So,
56:49 so when we talk about the role that they can play,
56:52 it's not only listing,
56:53 there I think uh other mechanisms
56:55 for them to play a role,
56:56 but of course,
56:57 we do have
56:58 Uh,
56:59 examples where,
57:00 um,
57:01 uh,
57:01 uh,
57:02 state-owned enterprise,
57:03 enterprises themselves are actually list,
57:05 listed.
57:06 Uh,
57:06 I indicated,
57:07 um,
57:08 the listing of,
57:08 of Telkom as,
57:09 as,
57:10 as,
57:10 as an indicator of uh such a listing.
57:12 Uh,
57:13 there had been before that,
57:14 um,
57:14 uh,
57:14 other ones.
57:15 For instance,
57:16 um,
57:16 the,
57:16 the government used to own a
57:18 uh steel mine,
57:19 uh,
57:20 an iron ore mining and steel producing,
57:22 uh,
57:22 uh,
57:22 entity called ISCO,
57:24 uh,
57:24 which was then listed to create,
57:26 um,
57:26 uh,
57:27 uh,
57:27 and,
57:27 and now,
57:28 uh,
57:29 an entity that is now known.
57:30 As ArcelorMittal,
57:32 um,
57:32 uh,
57:32 as an example of,
57:33 uh,
57:34 an earlier,
57:34 um,
57:35 listing of a state-owned enterprise.
57:37 Um,
57:37 uh,
57:37 that has also spawned another entity which is the
57:40 mining side of that entity which is Kumba Resources,
57:43 which is a,
57:44 uh,
57:44 a significant,
57:45 uh,
57:45 player in,
57:46 in,
57:46 in our market.
57:48 But the question says,
57:49 what is the,
57:50 uh,
57:50 appetite of,
57:51 um,
57:51 uh,
57:52 institutional investors,
57:53 uh,
57:53 especially pension funds.
57:55 But the fortunate thing about South Africa is that um uh pension
57:58 funds uh were created and became very active way back in the
58:02 um early 50s.
58:04 Um so
58:05 the,
58:05 the creation of pension funds created an,
58:07 an,
58:07 an,
58:07 an,
58:08 an institutional base that um
58:10 had been um quite
58:12 uh active and,
58:13 and,
58:13 and was
58:14 um uh instrumental in making some of the listings quite successful
58:18 uh um all along.
58:20 There were other developments that actually contributed to the,
58:22 the,
58:23 the,
58:23 the,
58:23 that is the creation of other um uh
58:27 investors like what,
58:28 what in South Africa we call unit trust.
58:30 I think they are
58:31 ordinarily called
58:32 mutual funds
58:33 uh which
58:35 uh aggregate the,
58:36 the,
58:36 the,
58:36 the,
58:37 the investments of smaller investors and then actually then
58:40 uh invest them in capital markets so that it,
58:42 it creates a platform for
58:44 the smaller investor.
58:45 investors to be able to actually
58:47 uh play a role in capital markets and,
58:48 and then provide the support
58:50 over and above uh institutional
58:52 pension funds like um
58:54 uh pension funds.
58:55 Now,
58:55 the appetite is quite significant because
58:58 they create a,
58:59 a platform for matching the liabilities of pension funds.
59:03 Uh,
59:03 pension funds by their nature are long term.
59:05 Uh,
59:05 people start contributing in,
59:07 in their twenties and
59:09 are likely to,
59:09 to,
59:10 to,
59:10 to start.
59:10 That are,
59:11 um,
59:11 getting a benefit in their 60s and continue to
59:14 get a benefit way to their 90s in,
59:16 in,
59:16 in most instances.
59:18 And capital markets,
59:19 especially of
59:20 um the kind of um entities that state-owned enterprises are,
59:24 which are long term in their nature,
59:26 are very,
59:26 very
59:27 attractive and suitable
59:29 for that ability to match the liabilities
59:31 uh that are very,
59:32 very long term in,
59:33 in,
59:34 in,
59:34 in,
59:34 in,
59:34 in,
59:34 in their nature.
59:36 Uh,
59:37 and,
59:37 and in our experience in South Africa,
59:39 that
59:40 has,
59:40 has always been the case going back to the 50s and continues
59:44 to be the case now.
59:45 Uh and it manifests itself,
59:47 for instance,
59:48 both in South Africa and I think globally,
59:50 uh in the appetite for,
59:51 for instance,
59:51 for infrastructure,
59:52 which ordinarily
59:54 uh and historically has been
59:56 uh provided by state-owned enterprises.
59:58 And,
59:58 and as,
59:59 as they get privatized,
1:00:00 uh,
1:00:01 and then They they become listed,
1:00:03 they continue to be an attractive
1:00:05 um uh uh investment for institutional investors.
1:00:09 Um,
1:00:09 and,
1:00:09 and of course,
1:00:11 the,
1:00:11 the,
1:00:11 the,
1:00:11 the part that is,
1:00:12 is,
1:00:12 is also quite significant is,
1:00:14 is,
1:00:14 is one that is listed to develop other um avenues
1:00:18 uh for creating
1:00:19 possible markets that are very attractive to investors,
1:00:22 especially
1:00:23 institutional ones.
1:00:24 Um,
1:00:24 you,
1:00:25 you,
1:00:25 you,
1:00:25 you,
1:00:25 you,
1:00:26 you,
1:00:26 you had The,
1:00:27 the,
1:00:27 the,
1:00:27 the focus now on infrastructure,
1:00:29 on commodities,
1:00:30 uh,
1:00:30 to look at,
1:00:31 uh,
1:00:31 derivatives as,
1:00:32 as,
1:00:32 as,
1:00:33 as,
1:00:33 as,
1:00:33 as another
1:00:34 uh development that actually again provides
1:00:37 a different way of,
1:00:39 uh,
1:00:39 providing access
1:00:41 uh to capital markets and then of course,
1:00:43 uh,
1:00:44 strengthening,
1:00:45 uh,
1:00:45 and enlarging the,
1:00:46 the,
1:00:46 the,
1:00:47 the the capital market space,
1:00:49 um,
1:00:49 that,
1:00:49 uh,
1:00:50 investors can,
1:00:50 can,
1:00:50 can play in.
1:00:52 And then the,
1:00:52 the,
1:00:52 the,
1:00:53 the,
1:00:53 the,
1:00:53 the,
1:00:53 the last point I want to make is,
1:00:55 of course,
1:00:55 that capital markets by and large,
1:00:57 yes,
1:00:57 depend on the institutional investors,
1:00:59 but actually are quite inherently also linked to the economies of,
1:01:02 of,
1:01:02 of
1:01:03 of,
1:01:03 of,
1:01:04 of countries in a sense that
1:01:06 Um,
1:01:07 if people have no money,
1:01:08 they can't invest,
1:01:09 uh,
1:01:09 whatever it,
1:01:09 it is.
1:01:10 So,
1:01:10 so the first thing is to have robust economies
1:01:12 that make it possible for people to have,
1:01:14 uh,
1:01:14 excess income which needs to be put somewhere and,
1:01:17 and,
1:01:17 and markets then become the ideal environment,
1:01:20 uh,
1:01:20 to put that in.
1:01:21 If they put it in banks which are also in,
1:01:24 in,
1:01:24 um,
1:01:24 uh,
1:01:25 in,
1:01:25 uh,
1:01:25 in the capital markets,
1:01:27 that's another
1:01:28 intermediation that makes it possible for,
1:01:31 uh,
1:01:31 smaller investors to participate in capital markets.
1:01:34 So
1:01:34 You,
1:01:34 you need to look at the,
1:01:36 the,
1:01:36 the,
1:01:36 the,
1:01:36 the market infrastructure beyond just
1:01:39 uh what's happening,
1:01:40 for instance,
1:01:40 in an exchange,
1:01:41 but to say what other supporting infrastructure,
1:01:43 financial supporting
1:01:44 infrastructure is available
1:01:46 um to support
1:01:47 um the,
1:01:48 the,
1:01:49 the exchange because
1:01:50 once those entities are listed,
1:01:51 then you can find
1:01:53 uh different participants or investors
1:01:56 to actually make it possible for,
1:01:58 for the,
1:01:58 for the,
1:01:59 for the,
1:01:59 for the listing to actually to be successful.
1:02:01 Um,
1:02:01 our experience,
1:02:02 of course,
1:02:03 Has,
1:02:03 has,
1:02:03 has,
1:02:03 has been very,
1:02:04 um,
1:02:05 uh,
1:02:05 very good.
1:02:05 I think the listings of,
1:02:06 uh,
1:02:06 of,
1:02:07 of uh some of our state-owned enterprises has been very,
1:02:09 very,
1:02:10 uh,
1:02:10 beneficial for us as investors and we'll continue to,
1:02:13 to do so.
1:02:14 And to the extent that,
1:02:15 um,
1:02:15 the,
1:02:16 uh,
1:02:16 state-owned enterprises are already playing in capital markets,
1:02:19 especially on the bond side,
1:02:21 um,
1:02:21 that also has been,
1:02:22 uh,
1:02:23 a significant,
1:02:23 uh,
1:02:24 area of,
1:02:25 uh,
1:02:25 participation for pension funds to match the liabilities,
1:02:28 uh,
1:02:28 going forward.
1:02:29 Um,
1:02:30 I would like to stop there for now.
1:02:32 Thank you very much Amed,
1:02:33 very,
1:02:33 very interesting,
1:02:34 um,
1:02:34 uh,
1:02:35 experience and thank you very much for sharing.
1:02:36 So let me now turn to
1:02:38 uh Nick Paget,
1:02:39 um,
1:02:39 so you're the co-founder of Fronttal Capital,
1:02:41 and,
1:02:42 and in that context,
1:02:43 you have invested in listed equity in over 60 countries in the world.
1:02:47 So,
1:02:47 um,
1:02:48 do you think that SOE this thing is a lucrative business for foreign investors
1:02:52 and what has been your general investment strategy when it comes to SOE and,
1:02:56 and how can countries attract,
1:02:58 um,
1:02:59 capital investment like yours,
1:03:01 um,
1:03:01 when,
1:03:01 when they want to balance with the domestic,
1:03:03 um,
1:03:04 capital base?
1:03:05 Nick,
1:03:05 the floor is yours.
1:03:11 Nick you muted.
1:03:16 Apologies.
1:03:17 Yeah,
1:03:17 you can hear me now,
1:03:18 yes.
1:03:19 Uh,
1:03:19 I was just saying maybe a couple of words on Frontora because
1:03:22 I think we're probably not a name that's familiar to the audience.
1:03:25 So,
1:03:26 as you said,
1:03:27 we invest in,
1:03:28 uh,
1:03:28 frontier markets and small emerging markets globally.
1:03:32 Uh,
1:03:32 we were,
1:03:33 we've been around since 2007.
1:03:35 We've invested in nearly 60 countries,
1:03:37 as you said,
1:03:37 and we're presently in 23 countries.
1:03:39 So,
1:03:39 to give you an idea of what's in our portfolio today,
1:03:42 uh,
1:03:43 our largest countries would include places like the Philippines,
1:03:46 Kazakhstan,
1:03:47 Ghana,
1:03:47 Vietnam,
1:03:49 uh,
1:03:49 the exchanges of some of our panelists,
1:03:51 uh,
1:03:52 Egypt,
1:03:53 uh,
1:03:53 Senegal,
1:03:53 and Cote d'Ivoire from the BRVM.
1:03:56 As well as like Rwanda,
1:03:57 Turkey,
1:03:57 Papua New Guinea,
1:03:58 Nigeria,
1:03:59 and a dozen others.
1:04:00 Uh,
1:04:01 we typically hold investments for around 3 to 5 years.
1:04:03 It could be longer or shorter,
1:04:05 it depends on pricing and,
1:04:06 uh,
1:04:07 and,
1:04:08 uh,
1:04:08 events.
1:04:09 Uh,
1:04:09 we have had our longest holding for for 13 years.
1:04:13 Um,
1:04:14 And our turnover is only 29% since inception.
1:04:17 So we're definitely not hot money.
1:04:18 We're long-term buy and hold investors.
1:04:20 So now to your question,
1:04:22 we look at every IPO
1:04:24 on its merits.
1:04:25 Uh,
1:04:26 some deals are good and others are not.
1:04:28 And that's true whether or not it's an SOE deal.
1:04:31 So,
1:04:32 with regard to SOE deals,
1:04:33 I think there's three attributes that are most important to us.
1:04:36 The first is pricing.
1:04:38 Is the valuation
1:04:39 attractive or not?
1:04:42 We are very valuation sensitive.
1:04:44 So even the best businesses in the world
1:04:46 can be priced too high,
1:04:48 and we would not buy it.
1:04:50 Uh,
1:04:50 we do not buy them if,
1:04:51 if the price is not right.
1:04:54 Uh,
1:04:54 the second thing we would look at is ownership.
1:04:56 Uh,
1:04:56 the best SOE IPOs
1:04:59 have had a strategic investor
1:05:01 for the previous couple of years and the state
1:05:04 ownership is already reduced to a minority stake.
1:05:07 Uh,
1:05:07 the report highlighted the case of Safaricom in Kenya,
1:05:10 where Vodafone was the one in charge.
1:05:12 And,
1:05:13 uh,
1:05:13 Safaricom is a great example
1:05:15 of how to do things.
1:05:16 And it's regarded as a tremendous success story.
1:05:19 Uh,
1:05:20 even though it took 4.5 years for the stock
1:05:22 price to permanently move above its IPO price because of
1:05:26 the global financial crisis,
1:05:28 uh,
1:05:28 today,
1:05:29 this company is the most advanced mobile money offering in the world,
1:05:33 and the stock is 8 times its Kenyan shilling
1:05:36 listing price.
1:05:37 And uh even in US dollars,
1:05:39 it's up about 5-fold.
1:05:42 Beyond valuation and ownership,
1:05:44 the 3 attribute
1:05:45 we look at is the business itself.
1:05:47 How attractive is its competitive position,
1:05:50 and its growth prospects.
1:05:52 And it's fair to say that normally,
1:05:53 again,
1:05:54 we feel most comfortable if there's a strategic investor calling the shots.
1:05:59 So let me make some general points now.
1:06:01 Um,
1:06:01 we've invested in SOEs where the state owned a
1:06:04 majority and we've invested in SOEs where the state,
1:06:07 state was below 50%.
1:06:09 Overwhelmingly,
1:06:10 our best experiences
1:06:12 have been when the state is a minority investor.
1:06:14 And that's true both in terms of money made
1:06:17 and the qualitative interaction
1:06:19 we've had with the company and our impression of the quality of the company.
1:06:24 The report cited a couple of examples where the state was in control,
1:06:27 but there was a dynamic leader that led the turnaround,
1:06:30 you know,
1:06:30 YPF in Argentina in the 90s was one example.
1:06:33 Um
1:06:34 And there's some others in the report.
1:06:35 So,
1:06:36 uh,
1:06:37 this can happen,
1:06:38 but all things equal,
1:06:39 we'd rather have a strategic in charge,
1:06:42 um,
1:06:43 than a dynamic leader
1:06:45 running a state-controlled ent entity.
1:06:47 And that's for the simple reason that,
1:06:49 uh,
1:06:50 the state is eternal,
1:06:51 but the leader is not.
1:06:53 And the,
1:06:54 when the state's in charge,
1:06:55 the state can change the leader,
1:06:56 and especially if you've got a dynamic change agent leader
1:06:59 who may ruffle some feathers of politicians or special interests.
1:07:04 And the postscript on YPF is that the state has reasserted its authority in
1:07:07 the past decade for domestic political reasons
1:07:09 and not to the benefit of shareholders.
1:07:12 I was just looking at the stock chart
1:07:13 last night
1:07:15 and
1:07:16 uh the stock traded at an all-time high of $69.20
1:07:19 in September of
1:07:20 2005.
1:07:21 And even 10 years ago,
1:07:22 it's still around $42.
1:07:24 Yesterday,
1:07:24 it closed at $5.22
1:07:27 even with oil
1:07:28 back above $75 a barrel.
1:07:31 No stock splits.
1:07:33 Um,
1:07:34 that's the data from Bloomberg.
1:07:36 So,
1:07:36 I,
1:07:36 I,
1:07:37 I take it as it's shown.
1:07:38 Um,
1:07:39 YPF,
1:07:39 we knew better a few years ago when we were involved in Argentina.
1:07:43 Um,
1:07:44 we've not been involved
1:07:45 and involved,
1:07:46 uh,
1:07:46 since the government turned populist again the last couple of years.
1:07:50 Um,
1:07:51 let me make,
1:07:52 uh,
1:07:52 I've got a few other points.
1:07:53 Let me make one and then I,
1:07:54 I can stop in the interest of time.
1:07:56 Uh,
1:07:56 we,
1:07:57 we don't mind the state still owning a minority stake,
1:08:00 as long as it shows it's a passive investor.
1:08:03 Um,
1:08:03 if it's a regulated business,
1:08:05 uh,
1:08:06 an ongoing state minority ownership position can actually
1:08:09 provide some protection against bad regulatory interference.
1:08:12 And it can also help when the company is a large taxpayer to the state treasury.
1:08:16 That tends to prevent
1:08:17 The state from enacting uh damaging legislation
1:08:20 or regulation that's poorly thought out.
1:08:22 Um,
1:08:23 so,
1:08:24 I'll turn it back to,
1:08:25 uh,
1:08:25 our moderator or I,
1:08:27 I got a couple other points if,
1:08:28 if it's your call,
1:08:29 if you want me to keep going or stop here.
1:08:32 Thanks a lot,
1:08:33 Nick,
1:08:33 and uh very useful and,
1:08:34 and very practical.
1:08:36 So thank you very much for being that,
1:08:37 that candid and direct.
1:08:39 So,
1:08:39 um,
1:08:40 we,
1:08:40 I'm going to skip the second round of questions so that
1:08:42 we can open uh uh to the question raised and,
1:08:45 and Nick,
1:08:45 we may come back to some of the points that you were beginning
1:08:48 based on the question,
1:08:49 um,
1:08:49 um,
1:08:50 there,
1:08:50 um,
1:08:51 and,
1:08:51 um,
1:08:52 so the first question which is interesting is the
1:08:55 issue of the risk of concentration of ownership.
1:08:58 Uh,
1:08:58 explicit or implicit,
1:09:00 um,
1:09:00 I mean,
1:09:01 um,
1:09:02 it's a question from Jean-Pascal Gano,
1:09:04 um,
1:09:04 so it would be interesting,
1:09:06 I think Martha,
1:09:06 you alluded to that at the start on,
1:09:08 on measures that may have been taken in Brazil,
1:09:11 uh,
1:09:11 to make sure that there is no,
1:09:12 um,
1:09:13 capture in practice by private investor or you have threshold on,
1:09:17 on ownership.
1:09:18 So can you explain a little bit what has been
1:09:20 the expense of Brazil and the pros and cons,
1:09:22 uh,
1:09:23 of these approaches based on your expense?
1:09:28 Sure,
1:09:29 so for SOEs uh here in Brazil,
1:09:32 um,
1:09:33 we have to understand that different sectors,
1:09:36 uh,
1:09:36 are treated in different ways.
1:09:39 So,
1:09:39 uh,
1:09:40 sometimes we're talking about a sector where,
1:09:43 uh,
1:09:44 before having a privatization,
1:09:46 we need to have a concession,
1:09:47 a contract,
1:09:48 um.
1:09:49 Um,
1:09:49 talking about how,
1:09:51 uh,
1:09:52 service must be provided because we're still
1:09:54 talking about some public services sometimes.
1:09:57 So
1:09:58 besides selling the company its shares,
1:10:00 you have a contract,
1:10:02 um,
1:10:03 about how to deliver the services to the population.
1:10:06 That's the case,
1:10:06 for example,
1:10:07 when you have the privateization of a port company.
1:10:10 Uh,
1:10:10 you'll,
1:10:11 you'll still have the need to have a regulation,
1:10:14 a regulatory agency
1:10:16 looking at this,
1:10:18 uh,
1:10:18 investor,
1:10:19 this private investor,
1:10:20 uh,
1:10:20 with,
1:10:21 uh,
1:10:22 investment obligations,
1:10:23 levels of quality of services.
1:10:26 Making sure
1:10:27 that the port is,
1:10:28 the port is open for all the enterprises and everyone that needs to enter
1:10:34 this port.
1:10:34 So
1:10:35 we have many types of regulations,
1:10:38 uh,
1:10:39 sometimes inside the contract.
1:10:41 And um that makes us not necessarily
1:10:45 uh have requirements for the selling of uh the shares,
1:10:51 but for the signing of the contract.
1:10:53 So it all depends on the model that,
1:10:55 that we're talking about.
1:10:57 When we talk about Eletrobras for example that I mentioned,
1:11:00 it's this uh giant energy company we have in here in Brazil that we just approved
1:11:05 a law.
1:11:06 Uh,
1:11:06 so that we can move forward with the capitalization
1:11:10 since it's so strategic because it's responsible
1:11:13 for almost half of the energy that is generated in Brazil
1:11:18 and more than half the transmission lines that we have here in Brazil.
1:11:22 So it is very strategic and we didn't want
1:11:25 one shareholder to be responsible for all the main decisions of this company.
1:11:31 So
1:11:31 Uh,
1:11:32 we decided to move,
1:11:33 uh,
1:11:34 through a capitalization of,
1:11:36 uh,
1:11:36 this company.
1:11:38 Uh,
1:11:38 making sure
1:11:39 that we have,
1:11:40 uh,
1:11:40 restrictive voting power,
1:11:43 so,
1:11:44 uh,
1:11:44 no,
1:11:45 no shareholder will have more than 10% of,
1:11:48 of this company.
1:11:49 So this was a,
1:11:50 a decision for Eletrobras,
1:11:52 for example,
1:11:53 and then government will lose control
1:11:55 of the company but still will,
1:11:57 will remain with some relevant,
1:11:59 um,
1:11:59 share,
1:12:00 uh,
1:12:00 in the case of,
1:12:01 um.
1:12:03 Eletrobras.
1:12:04 When we talk about the National Post,
1:12:05 for example,
1:12:06 it's a complete different thing.
1:12:08 Uh,
1:12:08 we have to make sure that the privatization process here in Brazil,
1:12:13 uh,
1:12:13 keeps delivering the services to the population all over the country.
1:12:17 That is a very big country with different conditions.
1:12:21 So it's not only about selling the company,
1:12:23 it's not only about,
1:12:25 um,
1:12:26 thinking about making money out of the private sector.
1:12:29 Not at all.
1:12:29 The privatization here in Brazil of most companies that we have
1:12:34 is aimed at bringing investments to the sector.
1:12:38 So because Brazil has a fiscal
1:12:40 situation,
1:12:40 uh,
1:12:41 that is difficult because public investments aren't happening.
1:12:44 Uh,
1:12:44 we need to bring more private investments to all those strategic sectors,
1:12:48 and we believe that,
1:12:49 uh,
1:12:50 the privatization is the right way to make sure
1:12:53 we bring the right amounts of investments,
1:12:56 but that,
1:12:57 uh,
1:12:57 comes with a list of obligations most times,
1:13:02 depending on the sector.
1:13:03 So for the National Post,
1:13:04 it's not only about selling the.
1:13:06 Shares
1:13:07 and everything that the company has today.
1:13:09 It is about keeping the services to all the more
1:13:13 than 5500 cities that we have here in Brazil.
1:13:17 So we will have a contract
1:13:19 together with this privatization process.
1:13:22 Uh,
1:13:22 we'll have a,
1:13:23 a regulatory agency making sure that services will be delivered.
1:13:28 So that's the,
1:13:29 the,
1:13:29 the most important thing when we talk about
1:13:32 privatization of SOEs here in Brazil.
1:13:34 It's that
1:13:35 it's not only about finding
1:13:37 Uh,
1:13:38 the,
1:13:38 the investors that have the right
1:13:41 capacity of making investments because that's an issue as well.
1:13:44 You have to understand,
1:13:46 uh,
1:13:46 what's the size of this IPO
1:13:48 and,
1:13:49 uh,
1:13:49 who could participate,
1:13:51 uh,
1:13:51 with immediate capital contribution to the process,
1:13:54 what's the size of the companies that will be able to participate,
1:13:58 uh,
1:13:59 will there,
1:14:00 uh,
1:14:00 be any need of,
1:14:01 uh,
1:14:01 valid.
1:14:02 of the Brazilian government or the agency in the case of uh changing control
1:14:08 after you have the,
1:14:08 the IPO of the company,
1:14:10 the privatization.
1:14:11 What are the pre-qualification mechanisms in the case of a contract together
1:14:16 uh with the privatization.
1:14:18 So all this is,
1:14:19 is very important and
1:14:21 it,
1:14:21 it depends a lot on what we're talking about,
1:14:24 what sector,
1:14:25 uh,
1:14:25 we're moving forward with.
1:14:27 Thank you very much Martha.
1:14:29 Mahmed,
1:14:29 can I turn to you also on that issue of concentration
1:14:31 and what has been the experience and the response uh in um
1:14:35 in Egypt,
1:14:35 so I go to you and then I have a question to,
1:14:38 after that to Nick and um Abel on,
1:14:40 on protection of
1:14:41 minority shareholders.
1:14:43 To,
1:14:43 to continue the point just opened by Nick before,
1:14:46 so
1:14:47 first,
1:14:47 Mohammed on that issue of concentration,
1:14:49 and then I will turn to Abel and Nick,
1:14:51 uh,
1:14:51 on,
1:14:51 on somehow,
1:14:52 uh,
1:14:52 protecting against the right of the state,
1:14:54 uh,
1:14:54 as you put it,
1:14:55 I think Nick earlier in the context of SOE district.
1:14:58 Mohammed.
1:14:59 OK,
1:15:00 uh,
1:15:00 I have two very quick comments before answering the issue of concentration,
1:15:04 and I'll have to interfere with the protecting minority as well,
1:15:07 unfortunately,
1:15:08 so I'll have to cover the spectrum.
1:15:10 Sorry about that,
1:15:11 but uh
1:15:12 I mean,
1:15:12 it happens in all cases.
1:15:14 As long as you do it sharply,
1:15:15 we're fine.
1:15:17 OK,
1:15:17 um,
1:15:18 uh,
1:15:18 for the issue of sustainability and seeing the impact on capital markets long term.
1:15:23 We cannot be waiting or we cannot wait for reforming
1:15:27 the public pension schemes and the public pension funds.
1:15:30 What we need to do is to have direct education
1:15:33 and financial and investment literacy with the public to have direct investments.
1:15:37 Now with the technological advancements,
1:15:40 we need not to wait
1:15:41 to have 1 million,
1:15:42 2 million,
1:15:43 30 million investors
1:15:45 investing incrementally on a passive approach
1:15:48 in capital markets,
1:15:50 and this is the only way to create.
1:15:51 Middle income class,
1:15:52 by the way,
1:15:53 the only way to create a middle income,
1:15:55 proper middle income class in economies is to have incremental saving long term,
1:16:00 2025 years,
1:16:02 doing it with very small amounts long term.
1:16:04 We cannot wait.
1:16:05 We cannot afford to wait to reform the public pension schemes.
1:16:08 So that is one of the points that I wanted to mention before
1:16:12 concentration risk.
1:16:14 I believe is not an issue,
1:16:16 uh,
1:16:17 uh,
1:16:17 and here you're talking about concentration,
1:16:19 a risk of ownership,
1:16:20 uh,
1:16:21 uh,
1:16:21 for the public.
1:16:22 Yes,
1:16:22 if I'm,
1:16:23 if I'm not mistaken,
1:16:24 for the public sector itself
1:16:25 is not an issue,
1:16:26 but it would depend on the sector.
1:16:28 I believe,
1:16:28 uh,
1:16:28 uh,
1:16:29 beautifully uh mentioned,
1:16:31 uh,
1:16:32 uh,
1:16:33 here would,
1:16:33 uh,
1:16:33 would depend on the type of sector
1:16:35 if it is a regulated sector or unregulated sector because regulated sectors
1:16:39 would allow you not to have intervention.
1:16:42 So,
1:16:42 uh,
1:16:42 so,
1:16:43 so basically
1:16:44 if we're talking about a level of governance
1:16:46 that is being,
1:16:47 uh,
1:16:48 uh,
1:16:49 disclosed,
1:16:50 implemented in
1:16:52 the country and the companies,
1:16:54 you don't have this type of risk.
1:16:55 On the contrary,
1:16:56 you will be ensuring that you have a minimum level of voice,
1:17:00 uh,
1:17:01 by retail investors,
1:17:02 by institutional investors,
1:17:03 by minority investors
1:17:05 in those companies,
1:17:06 for example,
1:17:07 like
1:17:08 Uh,
1:17:09 the,
1:17:09 the incremental voting for having,
1:17:11 uh,
1:17:12 minorities in,
1:17:13 on the board.
1:17:14 So it is a mixture of both,
1:17:16 let me put it that way.
1:17:17 However,
1:17:18 if we're talking about a sector
1:17:19 that has no real
1:17:22 undisclosed governance practices,
1:17:24 OK,
1:17:25 and regulations,
1:17:25 then in that case it,
1:17:26 it might be problematic at any one point of time
1:17:29 as Nick mentioned that the state can be changing
1:17:32 the,
1:17:32 the rules of the game basically and you will have to abide by it.
1:17:35 So.
1:17:35 So,
1:17:36 however,
1:17:36 having this
1:17:38 being companies that are listed makes it much more difficult
1:17:41 as opposed to being unlisted securities.
1:17:44 So basically investing through
1:17:46 SOEs that are listed
1:17:47 is much safer,
1:17:49 not safer.
1:17:49 I,
1:17:49 I don't,
1:17:50 I'm not,
1:17:50 I'm not trying to say safer.
1:17:52 It is,
1:17:52 uh,
1:17:52 you don't witness problematic issues with uh concentration of ownership
1:17:57 as it is the case for unlisted securities
1:18:00 when we come to that,
1:18:01 uh,
1:18:01 uh,
1:18:02 to that area.
1:18:03 For protecting minorities,
1:18:05 you need to have very clear rules
1:18:07 and to push with other entities,
1:18:08 not only the World Bank.
1:18:10 I believe one of the problems,
1:18:11 and I'll be very
1:18:12 as well honest here and,
1:18:13 and,
1:18:14 uh,
1:18:15 and,
1:18:15 uh,
1:18:15 and frank,
1:18:16 one of the problems with the World Bank and the
1:18:18 IMF and the IFC and all of these entities,
1:18:21 if you allow me,
1:18:21 Anika,
1:18:22 to to be,
1:18:23 to be blunt here,
1:18:24 is that
1:18:25 with every single macro.
1:18:26 Economic,
1:18:27 uh,
1:18:27 I would say policy reform and policy loan,
1:18:30 you don't have clear cut reforms
1:18:32 tackling capital markets.
1:18:34 So it is always being considered as a private sector white collar,
1:18:38 uh,
1:18:39 thing that people need to
1:18:41 do it their own.
1:18:42 No,
1:18:42 it's not the case.
1:18:42 It is a complementary product to have,
1:18:45 uh,
1:18:46 uh,
1:18:46 if you have a budget loan that is being provided.
1:18:48 Or uh,
1:18:49 uh,
1:18:50 a project loan,
1:18:51 you need to bundle it with
1:18:53 proper capital market development and financial inclusion and,
1:18:57 uh,
1:18:57 financial literacy.
1:18:58 Without having proper financial literacy starting from the age
1:19:01 of 10
1:19:02 maximum,
1:19:03 you will not be having new breed of investors
1:19:06 that would understand the concepts of incremental
1:19:08 saving and the importance of capital market.
1:19:12 Thank you very much,
1:19:12 Mohammed,
1:19:13 and I'm,
1:19:13 I'm sure that we look forward to continuing
1:19:15 the discussion bilaterally with the Egypt authorities.
1:19:18 Um,
1:19:18 we started it,
1:19:19 you may remember,
1:19:20 18 months ago,
1:19:21 so very happy to continue.
1:19:22 So let me turn to Abed and Nick.
1:19:24 I'm going to start with Abed and that issue of,
1:19:26 uh,
1:19:27 uh,
1:19:27 somehow the,
1:19:28 the influence of the state,
1:19:29 protection of minority shareholder.
1:19:31 How do you see that as an investor
1:19:33 and somehow what are the red lines,
1:19:35 uh,
1:19:35 that,
1:19:35 that come,
1:19:36 uh,
1:19:36 from in your decision making?
1:19:40 Uh,
1:19:40 the protection of minorities,
1:19:42 of course,
1:19:42 starts even before you have a,
1:19:44 a,
1:19:44 a listing,
1:19:45 an IPO.
1:19:46 It starts with your,
1:19:48 uh,
1:19:48 your,
1:19:49 your policy framework and your legal framework.
1:19:51 So,
1:19:52 so the,
1:19:52 the,
1:19:53 the,
1:19:53 the,
1:19:54 for instance,
1:19:54 in,
1:19:54 in our case,
1:19:55 you,
1:19:55 you,
1:19:56 you,
1:19:56 you,
1:19:56 you talk about there is a company's um,
1:19:58 uh,
1:19:59 law that protects minorities,
1:20:01 um,
1:20:01 and extends to,
1:20:03 um,
1:20:03 uh,
1:20:03 the listed environment so that,
1:20:05 that's quite important that,
1:20:06 um,
1:20:07 that is there,
1:20:08 um.
1:20:08 Because minorities are not only in,
1:20:11 in,
1:20:11 in,
1:20:11 in,
1:20:11 in the distant environment,
1:20:13 you have minorities in other aspects of uh the capital
1:20:15 markets where there's a need to actually protect them.
1:20:18 So
1:20:18 you need to look at the overall
1:20:20 uh policy and,
1:20:21 uh,
1:20:22 company,
1:20:22 uh,
1:20:23 legislation environment to,
1:20:24 to protect minorities.
1:20:26 In the listed environment,
1:20:27 especially when you're listing,
1:20:28 uh,
1:20:28 state-owned enterprises,
1:20:29 is to make sure that you have strong
1:20:31 shareholder agreements,
1:20:33 um,
1:20:33 uh,
1:20:34 designed specifically to protect minorities.
1:20:37 And to limit the influence of um
1:20:40 the principal uh seller,
1:20:41 the shareholder who is government,
1:20:43 who has
1:20:44 more powers than just shareholding because as I think
1:20:46 uh Nick made the point earlier to say,
1:20:48 well,
1:20:48 um,
1:20:49 the government,
1:20:50 of course,
1:20:50 can always change the rules.
1:20:51 So you need those protections to be encapsulated in,
1:20:54 in the shareholders' agreement to protect,
1:20:56 um,
1:20:56 your,
1:20:57 your,
1:20:57 your,
1:20:57 your,
1:20:57 your,
1:20:58 your,
1:20:58 your,
1:20:58 your minorities.
1:20:59 Um,
1:21:00 I just,
1:21:00 I think I'll stop there and just,
1:21:02 um,
1:21:02 uh,
1:21:02 grant Nick an opportunity to respond to the same.
1:21:07 Thank you very much Eve including for being careful with time,
1:21:08 Nick.
1:21:10 Well,
1:21:11 I think,
1:21:12 you know,
1:21:12 we,
1:21:13 we,
1:21:13 we look at everything on its own merits and you gotta look at the total
1:21:16 package.
1:21:17 Um,
1:21:18 you know,
1:21:19 I,
1:21:19 I see in the question box,
1:21:20 someone asked about the government wanting to,
1:21:24 um,
1:21:25 still keep voting majority through a golden share or something like that.
1:21:28 And,
1:21:29 um,
1:21:30 you know,
1:21:30 we wouldn't like something like that,
1:21:31 but we just,
1:21:32 we'd have to evaluate it.
1:21:33 It,
1:21:34 It's gonna all things equal,
1:21:35 lower valuation.
1:21:36 You know,
1:21:36 maybe it lowers the valuation by 20 or 30%,
1:21:40 you know,
1:21:40 that's the trade-off the government has to consider or uh the SOE has to consider.
1:21:44 You know,
1:21:44 we would,
1:21:45 that would certainly make it less likely for us to invest,
1:21:48 but the lower valuation might make it more likely,
1:21:50 and then you just,
1:21:51 we look at it in totality.
1:21:53 Um.
1:21:54 As far as minority protections,
1:21:55 you know,
1:21:55 there's,
1:21:56 without getting all the details,
1:21:58 you know,
1:21:58 the,
1:21:58 the developed markets around the world have a pretty
1:22:01 um well-established framework,
1:22:03 be it the US or the UK of of various package of minority protections.
1:22:07 So,
1:22:07 the closer that a local exchange is toward those um
1:22:11 global standards,
1:22:12 the better,
1:22:12 and the further away,
1:22:14 you know,
1:22:14 the worse and all things equal,
1:22:15 that,
1:22:16 again,
1:22:16 is going to affect valuation.
1:22:18 Uh,
1:22:19 with regard to concessions,
1:22:21 um,
1:22:22 I think,
1:22:23 uh,
1:22:24 uh,
1:22:26 What,
1:22:26 where we've seen it go wrong
1:22:28 is,
1:22:29 I'll give a case like Umimi,
1:22:31 um,
1:22:31 the big power company in Uganda,
1:22:33 which was privatized first
1:22:36 with,
1:22:36 uh,
1:22:37 through private equity ownership and then listed.
1:22:39 As a listing,
1:22:40 it's not,
1:22:40 the,
1:22:40 the privatization overall has been a success,
1:22:42 but as a listing,
1:22:43 it's not made money for shareholders.
1:22:45 And we've never invested in it
1:22:46 because the government was constantly tinkering with
1:22:49 what they wanted,
1:22:50 um,
1:22:51 Sort of the,
1:22:52 the key concession terms or,
1:22:53 or what,
1:22:54 they didn't provide clarity on how they were gonna renew the terms,
1:22:57 you know,
1:22:57 where they're gonna seek a better deal.
1:23:00 And we've seen that also in Pakistan with um
1:23:03 independent power producers,
1:23:04 which are not necessarily SOEs,
1:23:06 but they,
1:23:07 their customers
1:23:08 and suppliers are the state.
1:23:10 And to the extent they tinkered with the
1:23:12 concession terms or didn't provide clarity on things,
1:23:16 you know,
1:23:16 that definitely has hurt valuation and the stock performance.
1:23:18 So,
1:23:18 we're always
1:23:19 um
1:23:20 The concessions make sense and,
1:23:22 and,
1:23:22 and terms need to be defined,
1:23:24 but to the extent the state
1:23:26 Manipulates them,
1:23:27 you know,
1:23:27 that makes the,
1:23:28 the underlying investment,
1:23:29 whether SOE or not,
1:23:30 less attractive,
1:23:32 uh,
1:23:32 for someone like us.
1:23:33 And we're always,
1:23:34 you know,
1:23:34 that's the kind of thing we look at.
1:23:36 Again,
1:23:36 each case is its own case.
1:23:38 You've gotta consider carefully.
1:23:41 Thank you very,
1:23:41 oh sorry,
1:23:42 I,
1:23:42 I,
1:23:42 I need to get you closer.
1:23:44 Thank you very much Nick,
1:23:45 including
1:23:46 the fact that you look at the package and then there is a valuation,
1:23:48 so there are trade-offs,
1:23:49 I think there are trade-off on the state side,
1:23:51 but as you mentioned,
1:23:52 very strong trade-off also on the investment side.
1:23:55 Um,
1:23:55 so sorry we have to come to an end because it was really a,
1:23:58 a fascinating discussion and,
1:24:00 and,
1:24:00 and panel.
1:24:01 So,
1:24:01 uh,
1:24:01 big thanks,
1:24:02 uh,
1:24:02 to the four of you
1:24:03 and also big thanks to everybody who's listening and
1:24:06 sent a very interesting question through the chat.
1:24:08 I'm sorry we cannot go through everything.
1:24:10 I,
1:24:11 I can,
1:24:11 uh,
1:24:11 only say that this is
1:24:13 really the start of a discussion.
1:24:15 Uh,
1:24:15 the,
1:24:16 the report is now available online,
1:24:17 so please do not hesitate to go,
1:24:19 read,
1:24:20 download,
1:24:21 um,
1:24:21 and,
1:24:21 and.
1:24:22 And I hope that we'll have the opportunity
1:24:23 to continue to have events around these issues,
1:24:25 the report or more generally,
1:24:27 uh,
1:24:28 this kind of uh challenges.
1:24:29 Very interesting also to have a different set of perspective uh from the panelists.
1:24:34 Uh,
1:24:34 big thanks to the authors of the report and the
1:24:37 team who prepared it because that's a really important contribution
1:24:40 to the development of uh local capital market.
1:24:42 And let me conclude by thanking obviously,
1:24:46 uh,
1:24:46 Oliver Wineman,
1:24:46 the Ministry of Finance of Luxembourg,
1:24:48 the African.
1:24:49 Securities Association,
1:24:51 it was really a pleasure to have all of you today
1:24:53 and uh we very much look forward uh to continued work,
1:24:56 continued dialogue,
1:24:58 and to,
1:24:58 um,
1:24:59 support to the countries,
1:25:00 uh,
1:25:01 uh,
1:25:01 making,
1:25:02 uh,
1:25:02 uh,
1:25:03 progress in the development of local capital market,
1:25:05 including
1:25:06 through a so these things.
1:25:07 So thank you very much everybody,
1:25:09 a fascinating discussion,
1:25:10 and we look forward to have you again,
1:25:12 uh,
1:25:12 in the future and have a great day everybody.
1:25:15 Thank you,
1:25:15 bye bye.
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