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PRIVATISING NATIONAL OIL COMPANIES: ASSESSING THE IMPACT ON FIRM PERFORMANCE - page 9 / 30

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Initial share offerings

22 out of the 28 initial SIPs were genuine Initial Public Offerings (IPOs), three

companies already had international listings at the time of the first government sell-

down, and a further three had small domestic listings.9 Average state ownership prior

to these SIPs was 88%, with 25% being sold to private investors. Only one company

was privatised fully in a single transaction. Expressed in 2006 money, the 28 initial

SIPs in the sample raised a total of US$48.6 billion, or an average of US$1.74 billion

per transaction. The UK stands out as the frontrunner for privatisation, having sold

three different companies to the equity markets by 1987. There has also been a

noticeable increase in the number of transactions after the year 2000 (12 out of 28),

which has consequences for the oil price environment. The average real terms oil

price (in 2005 money) for the three years prior to privatisation is US$30.4 per barrel,

compared to US$30.9 per barrel in the year of the SIP, and US$34.3 in the three years

thereafter. The data suggests that governments do not (and cannot) price their

offerings at the top of the macro cycle.

Follow-on offerings

In a second round of data collection, the time period of firm performance data was

extended to include the 7-year periods around any SIP follow-on transactions

completed by the 28 firms in the original sample. Because these offers are rarely more

than seven years apart, the time series in practice were extended to cover the period

from 3 years prior to the first SIP to 3 years after the final SIP. A total of 38 follow-on

offerings were identified (see Table 1), of which 32 have been included in the

extended data sample – 5 out of 6 of the others took place in 2005 or later, so there is

9 These small local offers mandated only limited disclosure requirements and saw very illiquid share trading. They might therefore not be seen as “proper” privatisations, with the public listing having little impact on the monitoring of managerial performance.

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