Venezuela Plans Stock Sale of State-Owned Companies | Business News

 Venezuela Plans Stock Sale of State-Owned Companies | Business News

By REGINA GARCIA CANO, Associated Press

CARACAS, Venezuela (AP)-By discontinuing its socialist model, the Venezuelan government plans to open up for private investment in many state-owned companies in key sectors as it seeks to meet the demand for capital for businesses that are less invested. The small details of the move raise skepticism.

The government intends to sell between 5% and 10% of the shares in various companies, some of which were nationalized by former President Hugo Chávez in his desire to transform the South American country into a socialist state. But the basic information for a public offering, including the number of shares, stock price and the exchange on which to list a company, remained unclear ahead of Monday’s planned sale.

Chávez’s successor, President Nicolás Maduro, this week said sales would be targeted “basically” to local investors but foreign money could also flow to companies, including telephone and internet service. provider CANTV, which the government nationalized in 2007 after buying a stake in Verizon.

“We need capital for the growth of all public companies,” Maduro said at a televised event on Wednesday. “We need technology. We need new markets, and we’re going to move forward.”

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Interest, however, may be limited to investors with government ties or those with an appetite for risk.

The country is still under economic sanctions imposed by the U.S. and other countries that prevent investors from being able to funnel money to state-owned companies in Venezuela. And the percentages announced by Maduro will not give decision-making power to private investors to make the necessary changes within corporations.

Among the companies Maduro mentioned were CANTV and its subsidiary Movilnet, petrochemical producer Petroquimica de Venezuela and a conglomerate focused on the mining sector. Other parts of CANTV are already trading on the Caracas Stock Exchange, the oldest exchange in the country.

At the turn of the century, Chávez made a series of acquisitions in the electricity, telecommunications, natural gas and oil sectors. But the government has made minimal investment in some of these companies, leaving them to provide substandard services.

Power outage days are common across the country. Millions of households do not have access to water or service because it is intermittent. Internet and telephone services are lacking.

Supporters and opponents of the government have both complained about poor basic services across the country even in the absence of upcoming elections. But economists point out that the Venezuelan government needs to improve some of the services even if it is even less in the 2024 presidential election.

“Undoubtedly we have seen a paradigm shift that is largely forced by circumstances but also increasingly motivated by political persistence,” said Luis Prato, senior economist at the firm Torino Capital. “Since June 2014, with this significant drop in oil prices, the Maduro administration has started to see a decline in oil revenues. After all, we went through a period from 2014 to 2019 of price controls, in a more intermediate state. But to the extent that the state is starting to lose incidental ability to create wealth and grow, it is starting to provide space for private sector participation.

Venezuela is still under a protracted social, economic and humanitarian crisis credited with falling oil prices, economic sanctions and two decades of mismanagement by socialist governments. But the government has taken steps to ease some economic pressures, including giving in to its lengthy and complicated efforts to curb U.S. dollar transactions in favor of the local bolivar, whose value has plummeted. inflation.

Maduro during the announcement this week said the state-owned companies will be listed on “various stock exchanges” in the country unspecified.

But on Friday, Gustavo Pulido, president of the Caracas Stock Exchange, did not receive any information on the planned sale of the stock. He said the process of registering other companies and finally listing them is long and requires disclosure of financial documents.

“It has to be as much as you want to do to make the installation successful. I can’t tell you a specific time, ”Pulido said, adding that an offer on the Caracas Stock Exchange could not be structured on Monday.

The government established its own exchange in 2010. A government spokesman did not respond to a request for comment from The Associated Press about the exchanges it intended to use.

Prato said the government is likely to use self -exchange or a separate digital system at present but it has had limited results.

Henkel Garcia, director of Caracas -based company Econometrica, said companies need a lot of investments to improve the quality of their services, which was even better before they were nationalized. But he warned that the country lacks a mechanism to manage companies ’accounting and financial reporting procedures, which makes it impossible to guarantee that private investment in state-owned companies will be costly.

The missing component, he said, created a scenario similar to post-Soviet reforms in which many state-owned companies were privatized.

“Whether this is really the beginning of the overall sale or the overall delivery of these companies, that for me is a possible scenario, and we have to ask who they will deliver because we have stages like a Russia, where these formerly state -owned companies ended up in the hands of people close to the government, ”Henkel said. “So, it’s a complicated event like someone opening the door to something positive, but with the weakness of the institution we have and the lack of reliable referees, well, it doesn’t end very well. that way. “

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