Posted on 3/13/2008, 7:00:59 AM by bruinbirdman
Sweden’s flagship privatisation programme is facing delays as the government grapples with the tumult in global financial markets.
The sell-off is one of the centre-right government’s key pledges, made when it was elected 18 months ago.
“We are evaluating timing and price. It is possible that subprime events will have repercussions on our agenda,” Mats Odell, minister for financial markets, who is overseeing the privatisation process, told the Financial Times in an interview.
The government of Fredrik Reinfeldt, prime minister, is in the process of selling stakes in six companies by 2010, including Nordea, the banking group, SBAB, a mortgage lender, and TeliaSonera, the telecommunications company. The sales mark a break with Sweden’s socialist past to allow the free market a greater role in the economy.
But the government faces the prospect of postponing some of the sales until investor sentiment recovers.
Mr Odell said he was confident the government would reach its original goal of raising SKr200bn ($33bn, €21bn, £16bn) by 2010 from the sales but admitted it might not be able to sell all six of the companies as originally planned. So far the government has raised just SKr18bn from the sale of 8 per cent of its 45 per cent stake in TeliaSonera and SKr2.2bn from the sale of its 6.6 per cent stake in OMX, a stock market company, to Nasdaq and Borse Dubai.
“We are committed to getting the best price [for these privatisations] and we are analysing right now what the right time is to make a deal. There is no deadline,” he said.
Mr Odell said that the government’s plans to offload its 100 per cent stake in SBAB might have to be put on hold as “mortgage lenders are not exactly the top of everyone’s list”.
He also acknowledged that current market conditions were not ideal for selling banks. The government is seeking to sell its 19.9 per cent stake in Nordea.
One head of research for a Swedish bank, who asked not be named, said the privatisation process had “basically hit a wall” as a result of market conditions.
However, the programme is expected to receive a boost in coming weeks when the government announces the sale of Vin & Sprit, maker of Absolut vodka, for up to $7bn. It is also hoping to sell its 100 per cent stake in Vasakronan, a property company, at a time when the property market is showing early signs of weakening.
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