Venezuela seeks investors for state firms
Nation’s socialist government to offer small stakes in businesses it seized
CARACAS, Venezuela — Venezuela’s government is seeking private investors to pump funds into vital but crippled state-run companies, decades after seizing them in the name of socialism.
The government intends today to offer 5% to 10% stakes in companies ranging from telephone and internet service providers to a petrochemical producer.
There is lack of details provided by the government about the sale, including what price it is seeking for shares in the companies and on what stock market they might be listed. Some are speculating the move could be a first step toward returning the companies to private hands.
“We need capital for the development of all public companies,” President Nicolas Maduro said Wednesday. “We need technology. We need new markets, and we are going to move forward.”
It’s a marked departure from Maduro’s predecessor, the late President Hugo Chavez, who nationalized many companies in his bid to transform the South American country into a socialist state. Among the companies Maduro mentioned are CANTV and its subsidiary Movilnet, petrochemical producer Petroquimica de Venezuela and a conglomerate focused in the mining sector.
The country is still under economic sanctions imposed by the U.S. and other countries that prevent investors from being able to funnel money to Venezuela’s stateowned companies. And the percentages Maduro announced would not give private investors decision-making powers to undertake much-needed changes within the corporations.
Days-long power outages are common across the country. Millions of households either do not have access to water or the service is intermittent. Internet and phone services are deficient.
Economists point out that Venezuela’s government needs to improve some of those services even if it is slightly ahead of the 2024 presidential election.
“We are no doubt seeing a paradigm shift that is largely forced by the circumstances but also largely fueled by political survival,” Luis Prato, senior economist with the firm Torino Capital. “Since June 2014, with this significant drop in oil prices, the Maduro administration began to see a drop in oil revenues. Then, we went through a period from 2014 to 2019 of price controls, of a more intervening state.”
But as the state lost the ability to generate wealth and growth, Prato said, ”it began to make room for participation of the private sector.”
Some shares of CANTV have long traded on the Stock Exchange of Caracas, the country’s oldest exchange. Maduro during last week’s announcement said the stateowned companies would be listed in the country’s “various stock exchanges” without specifying.
But by Friday, Gustavo Pulido, president of the Stock Exchange of Caracas, had not received any information of the planned stock sales. He said the process to register the other companies and eventually list them is lengthy and requires the disclosure of financial documents.
“It takes as long as you want to take to make the placement successful. I couldn’t tell you a certain time,” Pulido said, adding that an offering on the Stock Exchange of Caracas could not be structured by today.
The government established its own exchange in 2010.
Prato said the government is likely to use its own exchange or a separate digital system for now but that it would have limited results.
Henkel Garcia, director of the Caracas-based firm Econometrica, said the companies require significant investments to improve the quality of their services, which were much better before they were nationalized. But he warned that the country lacks a mechanism to oversee the accounting and financial reporting procedures of the companies, making it impossible to guarantee the private investment in the state companies would be appropriately spent.