Another Victory : PPL Privatization

[Silaaj]

Re: Another Victory : PPL Privatization

@Zafra

Its simple. There is no confidence in Pakistan and its political set up. Its not that hard. Companies that need to build capital quickly sell their shares at a lower value so that the investor can make a quick profit and stay on based on the idea that they have made a profit and will make more.

Its standard investment economic thinking.

If you sell stocks at current value few will buy because they don’t see any profit realization in the near future. If you sell stakes at a lower price, they realize a profit right off the bat.

I agree that Pak govt lacks the required reputation level…but in this case, it wasnt PPL, it was the govt that was looking to sell. There is an urgency to raise cash, but a few days here and there would not make a difference. Plus, the stock could have been sold at market value, or even better. There was plenty of demand. The issue was oversubscribed.

Block buyers are prohibited from selling their stakes for a pre-specified period of time. In other words, they cannot realize a profit right off the bat. For such investors, the enticement factor is dividends.