Algeria – Foreign investment in stock market: new option to attract FDI (Expert)

The proposal to sell via the stock exchange, shares in Algerian companies to foreign investors non-residents currently in the office of the Ministry of Industry and Investment, is a new way to attract FDI into the Algeria, as long as the state regulates the operation, the expert said Tuesday Mahdjoub Bedda. Asked by APS if approval of such a measure would make easy prey Algerian companies to acquire foreign Mr. Bedda explained that such transfers would not have dangerous repercussions” of the national economy if the factors control, regulation and organization are guaranteed by the state. ” In all cases, emissions actions carried out by the few Algerian companies IPOs have not exceeded a definite threshold of capital. Saidal had opened its capital to 30%, says the economist. Therefore, even if Algeria decides to go ahead and approve such a measure, redemptions of shares by foreign investors will be similar to the openings of capital made ​​on the basis of the so-called rule of 49% -51% with the grant management of the corporate foreign partner, he points out in this regard. In addition, foreign companies often tend to share the risks and are not necessarily interested in buying all the assets in the form of tender offer (IPO) or merger. “Such a decision in force in many emerging countries in South and give authorities a new opportunity to attract foreign investment and help create partnerships with more flexible mechanisms,” says this economist. The impact of such a measure is only positive. First it allows to control the financial transactions of these companies because transparency that characterizes the financial market also helps to control the transfer of funds,” real headache for Chinese authorities,” he notes. Mr. Bedda stresses, however, the aspect of regulation and oversight of this operation to counter the temptation to speculation that characterizes this type of acquisitions. “Whatever the conditions, Algeria has to adapt to the system World Economic and can not remain immune to the transformations that occur throughout the world, especially as it is called in the next two years to join the WTO, “he said. The financial market development is necessary because of the considerable pressure experienced by Algerian banks on lending policies, of which they are compelled to observe prudential and solvency in accordance with Basel I and Basel II. In the same vein, the fabric Algerian industrial unstructured needs new partnership arrangements for the restructuring, after stopping the privatization process for lack of visibility, which has characterized this operation, the economist also offers NPC deputy. The current situation of the industrial fabric is shows a narrowing of the public sector and significant development of private sector in any niche business, but lack of organization, however, and framing, says Mr. Bedda. Questioned further on the proposal to give the public the right preemption of state in the acquisition of foreign assets on the stock exchange, Mr. Bedda held that this right applied by many countries in specified areas, also needs to be adjusted by taking account of the process Operation and objectives. It is important in this kind of operation to determine the target audience that will participate in the purchase of the assets of foreign companies and the benefits expected from such participation. “If the purpose of participation general public is the mobilization of financial resources and liquidity, this does not pose a problem, but if it is to redistribute the assets of the shareholders well defined, this option may cause opposition from corporate issuers actions. ” However, it notes that the purchase of foreign assets on the stock exchange determined by shareholders is only recommended in case of opening the capital specialist companies, which require that licensees are the same field of activity that issuing company shares. Otherwise, an acquisition by the public companies specializing in highly specialized sectors such as telecommunications, manufacturing or technology may reveal differences in the later determination of business strategy. “These companies are still developing strategies consistent with the vision of their parent companies as they try to achieve an open market with strong growth. Divergence of shareholders on this strategy risks sending a message that is not likely to reassure foreign investors, “concluded the expert. APS

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