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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.