Disinvestment of state-owned enterprises may be a contentious issue in India, but firms here as well as those in other parts of the world stand to gain from the wave of disinvestment that will certainly follow the move by governments worldwide to bail out companies by acquiring stakes in or extending credit lines to them.
The trend is beginning to manifest itself in Europe, where Fiat’s boss is lobbying governments for support to acquire Chrysler and GM’s European unit to create an auto giant. Such a move would have been unthinkable a few years ago. To be sure, the state won’t be selling any assets in this instance, but it is involved in trying to save these troubled firms and will likely play the role of a facilitator in a deal should one come about.
And while it is unlikely any government will be able to sell its stake in large banks and finance companies, there will definitely be buyers for parts of these companies.
Healthy Indian companies would do well to look at what’s available: It will likely go cheap.