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Advisors to Privatization of State-Owned Enterprises
and Government Financial Advisory Services
Assisting
state-run enterprises in planning and executing privation
or BOT projects
China Steel's
first secondary offering
In August
1988, Global Financial Services was retained by Commission
of National Corporations, the Ministry of Economic Affairs,
to serve as the financial consultant for the sale of China
Steel Corporation's shares owned by Chinese Petroleum Corporation.
The number of shares sold exceeded 180 million, or 2.8% of
the total shares issued by China Steel. With prudent coordination
by Global Financial Services, the entire project was successfully
completed in June 1989, marking the commencement of the government's
efforts to privatize state-run enterprises. This project also
marked the first successfully completed public sale of stock
in a state-run enterprise to take place in Taiwan in recent
years. Because the market value of the shares to be sold exceeded
NT$8 billion, Global Financial Services assisted the Commission
of National Corporations in putting together a team of 18
brokerage houses, setting a record for the largest such team
ever formed in Taiwan.
China Steel's
second secondary offering
Following
China Steel's first secondary offering in 1989, Global Financial
Services emerged as the winner of an open bidding process,
and once again retained by Commission of National Corporations,
the Ministry of Economic Affairs. GFS
served as the financial consultant for China Steel's secondary
offering in 1990, taking charge of the planning and execution
of the sale of 376 billion shares of China Steel stock-representing
all the shares owned by Taiwan Power and a portion of those
owned by National Treasury. After assembling a team that included
50 brokerage houses, Global Financial Services concluded the transaction successfully in June 1991. Global
Financial Services also assisted the Commission of National
Corporations to establish an evaluation committee with members
drawn from relevant government agencies and experts from academia.
The major mission of this committee was to assess and ultimately
decide the pricing of the shares to be sold, as well as arrange
various procedures related to the sale while taking into account
the perspectives from different departments and outside parties.
In addition, Global Financial Services provided a large amount
of pertinent information and recommendations for the reference
by the "Panel on Promotion of Privatization of State-Run Enterprises" as it was revising regulations on the privatization of state-run
enterprises to the private sector.
China Petrochemical
Development Corporation's IPO
In December
1987, the Executive Yuan instructed The China Petrochemical
Development Corporation to go public, and included in the
budget for the sale of 20% of China Petrochemical Development
Corporation shares owned by Chinese Petroleum Corporation,
(over 191million shares). Through an open bidding process,
Global Financial Services was selected in September 1989
as the financial consultant of the Ministry of Economic Affairs
for the planning and execution
of the stock sale. The entire project was completed in July
1991, and was the first case of a privatization of a state-run
enterprise through an IPO in Taiwan in recent years. During
this process, Global Financial Services not only participated
and assisted in the revision of the related articles of China
Petrochemical Development Corporation, but it was also actively
involved in communicating with employees about implications
of the privatization, marking the first step of privatization
by China Petrochemical Development Corporation.
China Steel's
third secondary offering
Subsequent
to China Steel's first two secondary offerings, the Ministry
of Economic Affairs planned to dispose of a total of 1.4
billion shares of China Steel held by the National Treasury
15% of
the total number of shares issued by China Steel during the 1991 fiscal year, Global Financial
Services' expertise once again was recognized by the Ministry
of Economic Affairs, who retained the company to serve as
the financial consultant for this project. As the number
of shares and transaction values involved were unprecedented
in scale, with a complexity that was much greater than had
been seen in any previous deals underwritten in Taiwan as
well as the relatively small scale of domestic capital markets Global
Financial Services actively sought to offer a portion of the
shares on the international capital markets in order to create
investment demand. The entire project was concluded in May
1992. The project marked the first time that a Taiwanese company
issued global depositary receipts on international capital
markets, and the sale drew the interest of major investment
banks around the world.
Assessment of
Airport privatization feasibility for the Civil Aeronautic
Administration of the Ministry of Transportation and Communications.
With an aim
to raise operational efficiency of Taiwan's airports, Civil
Aeronautic Administration of the the Ministry of Transportation
and Communication intended to assess the feasibility of privatizing
airports in Taiwan. On November 16, 1991, Global Financial Services was selected in an open bidding process to perform this feasibiliey
study. Global Financial Services first went ahead to understand
the business models or privatization processes in place at
foreign airports. After evaluation of the current status of
domestic airports, their future development prospects, and
domestic aviation laws, Global Financial Services drafted
a privatization plan, analyzing its feasibility and factors
to be considered. The project was the first formal
evaluation of the feasibility of airport privatization in Taiwan.
Business
plan for small and medium business development company
Global Financial
Services was retained by the Ministry of Economic Affairs in December
1991 to draft a plan for the establishment of a development
company to assist the government in accomplishing the goal of investing and incubating small and medium
businesses based on the operation of the Small and Medium Business
Development Fund. Global Financial Services not only put together a plan for the establishment of the development company
on behalf of the Ministry of Economic Affairs, but it also,
in accordance with the government's policy objectives, incorporated
into the business plan and approaches in use by domestic and
foreign private sector investment and development companies.
This allowed the development company to simultaneously meet
the government's policy objectives and the demand for operational
efficiency.
Privatization
of Mountain Ali Forest Railway
In May 1993,
the Taiwan Provincial Government's Forestry Bureau retained
Global Financial Services to perform an assessment of privatization
plans for the Mount Ali Forest Railway. The Mount Ali Forest
Railway spans 85.44 kilometers, and is one of the world's
few remaining mountain railroads. Since the opening of highways
in the area, the Railway has faced competition that has led
to continued losses. The Bureau in charge of the Railway intended
to open the operation of the railway to the private sector
in order to improve efficiency, and allow this cultural assets
to be preserved. Global Financial Services' mapped out plans
for recommendations on those service items that could be privatized
and the privatized business model that would provide adequate
returns and attract private sector interest in investing in
the operation of the railway. The privatization targets -included
the railway, existing Mount Ali hotels, parking lots, and
land available for private-sector development into international-standard
tourist hotels with a projected 18% rate of return on the
investment. The Forestry Bureau made a report based on this
plan to the provincial government and central government for
their reference in privatizing the Mount Ali Forest Railway.
Privatization
of Taipower
In order
to continue the implementation of the government's policy
of privatizing state-run enterprises, and increase the operational
efficiency of Taiwan Power, Global Financial Services was
retained by Taipower to organize a consulting team to assess
the possibilities of the privatization of Taipower and devise
an initial plan. Because
Taiwan Power is a state-run utilities business, and has a
operational monopoly over power supply in Taiwan, given its
monopolistic feature and social responsibilities, mapping
out plans for its privatization, redesign of its industrial
structure to promote the operating efficiency of the overall
utilities industry was called for. In drafting its proposal
for possible ways of privatization, based on the characteristics
of the domestic utilities business, Global Financial Services
first analyzed the industry structure that would be most appropriate
for domestic situation. It also took into account similar
projects in other countries, and together with experiences
that members of the consulting team had had with the privatization
of state-run enterprises. It developed several possible
privatization approaches for the government's consideration
in anticipation of meeting long-term domestic power demand
as well as enhancing operating efficiency of the whole utilities
industry when future privatization plans were to actually
be implemented. In terms of assets, Taipower was the largest
corporation domestically.This project marked the first time
that the government pursued privatization of a state-run enterprise
with a high degree of market monopoly. The analysis of industry
structure and recommendations provided by the consulting team
assembled by Global Financial Services went well beyond the
scope of past privatization projects. Therefore, this project
was an important milestone for the government's campaign to
privatize state-run enterprises.
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