The CNV paves the way for privatizations and thinks about a 90s-style model

In the context of this process, the CNV was anticipated and paved the way for the capital market to be the protagonist. And the fact is that, although the CNV No decides which companies are privatized, but that is a decision made by the Government, the organization led by Roberto Silva does establish the regulatory framework so that, if a public company is nationalized, the process in the capital market is adequate.

Privatizations: what the CNV regulations established

The modification comes from the side of the Public Acquisition Offers (OPAs). It happens that, to privatize a company, the idea is to sell its shares on the capital market. However, when such an offer is launched on the market and a firm’s shares are offered in large quantities, a takeover bid can be activated, a process in which buyers are obliged to make an offer to purchase the remaining securities. .

This, in theory, could end up removing the company from the capital market, which is contradictory to the objective of maintaining its active listing. Consequently, to avoid this problem, the CNV modified the regulations so that, When a public company is sold by the State, the takeover regime does not apply.

The “vintage” background

Leandro Monnittolafinancial advisor, explains in statements to this medium that the CNV’s intention is to implement a new takeover systemwhich has two key objectives: “First, that the market can actively participate; secondthat the public sector (in this case) also has the option of placing debt on the market. That is, it is financed through it. With this, the market would be strengthened, since companies in the process of privatization would seek financing via corporate loans.”

With this objective, the CNV also reintroduced a rule from the 90s, when large companies, such as YPF and Telecom, were privatized. This regulation allows, When listing a public company on the market, prior accounting balance sheets are not required with the same standards as the private market.since, many times, public companies do not meet these requirements. Instead, they are given a “waiver” or transition period so that they can adapt their balance sheets to comply with capital market regulations.

In simple terms, as Monnittola explains well, It is no longer mandatory to carry out takeover bids for these cases. The sale will be totally or partially through the public offering of shares and the presentation of balance sheets is made more flexible, “an item that is difficult for state companies to comply with.”

Donald Trump, transparency and governance

Jorge Compagnuccicontent director at Target Market Global (TMG), analyzes the measure in dialogue with this medium. For the strategist, facing the privatization process now through the capital market “has a very important risk, which is the ‘momentum’.”

For Compagnucci This should have been done before, “along with the approval of the Bases law or within the money laundering process.” And he considers that the launch of these privatizations is to seduce that capital that entered via money launderingwhich does not generate “too many expectations” and remembers that “These are not the 90s”.

The expert explains that the emerging world is in depression. This is aggravated by the possibility that the triumph of donald trump lead markets like Argentina’s to a debt crisis in the coming years. “In the specific case of our country, the high level of debt and the low capacity to generate foreign exchange they aggravate the limitations,” he says.

Compagnucci outlines that the rebounds observed in recent months in the local market are, in his opinion, “mere passing illusions, the result of money laundering”. That said, he assures that the Argentine economy depends, to a large extent, on laundered dollars and that these funds are “intimately linked to politics and to the interests of the ‘friends of power’.”

How privatizations can turn out

Therefore, does not have positive expectations about the privatization process. “Beyond the dollars that Argentina could get, which I don’t think are many, the most beneficial thing would be to achieve reduce the expenses generated by these companies deficient for the State.”

And he adds that “Argentina is not attractive for investors”. This is because the local economy does not offer the necessary incentives for large capital investments from abroad, “and privatizations seem to be designed to benefit a small group linked to political power, rather than to generate structural change.”

For the expert, “this is more than clear when observing that even the most dynamic sectors, such as the media or service and energy companies, are closely linked to local political interests, which further deters foreign investors. ”. Ultimately, for Compagnucci Privatizations, under current conditions, have a practically zero expectation of success, and any improvement will be merely temporary and limited to the local level.

In this way, it concludes that bad “timing” not only affects the opportunity to attract investment, but also reinforces the perception that the main objective of these privatizations is to capture the funds regularized in laundering, rather than attracting genuine investments.

The risks of privatizing via the capital market

The economist Federico Glustein explains in a conversation with this medium that privatizing through the capital market raises “a very particular phenomenon“. First, it indicates that when you privatize through the capital market you are exposed to risk. “To what type of risk? That any type of company can buy the share package of the company to be privatized, which results in dominant positions,” he points out.

For Glustein, it is important to consider that, if restrictions are not imposed, it is possible that companies from the same country, or even from other countries, “acquire strategic assets“For example, in the energy sector, firms from Italy or Spain could invest in local companies. “This would create a kind of national corporation, with control of key assets in foreign hands,” he says.

The economist indicates, however, that there is an associated risk: If a company loses value in the capital market, its attractiveness for future investments could decrease. This could lead you to seek to maximize your profitability without fully complying with the expected service.

In this sense, “although allowing foreign investments can make certain sectors more visible and attractive globally, there is also the risk that others without experience in the sector will buy strategic assets just to make quick profits,” he comments, which could not be beneficial in the long term. “In the current context, it seems more prudent to focus on protect truly strategic assets instead of allowing acquisitions without the necessary knowledge and commitment,” he asserts.

Finally, it indicates that it is true that today some public companies present lossful results, “while others manage strategic assets“. Therefore, he suggests that a solution would be to consider the sale of these organizations under specific conditions, such as the need for production or the participation of companies with experience and capacity to reform the funds. “This approach would also be applicable to all other public services,” he concludes.