Why Should Governments Privatize More After Coronacrisis?

1-why privatization

 

The WSJ Tue, June 16, B10 “Fannie, Freddie Tap Advisory Firms” to advise them on raising fresh capital as they move to exit government control.  Having these mortgage giants reduce dependence on government is a welcome step and long overdue.

Unlike most countries U.S. is already a largely privatized economy. The coronacrisis has increased government role and well as ownership in certain sectors, albeit marginally. It is also an opportunity for governments to reduce ownership in key sectors.

Nearly all governments are running deficits to battle the coronacrisis.  In addition to the traditional privatization route (equity and M&A), governments ought to be looking to alternative forms to support fund raising, enhance risk transfer and governance and introduce private sector efficiencies.  These efforts include real estate monetization, securitization of public sector assets,  PPPs for infrastructure as well as divesting companies and assets where government role should be limited.

Author: Sameer_Jain

Partner. Sameer Jain is founder of FinTech ActiveAllocator.com, the world’s first portal that seamlessly integrates traditional, illiquid and alternative investments within portfolios. Prior to this he was Chief Economist & Managing Director at AR Capital. Before that he headed Investment Content & Strategy at UBS Alternative Investments. At UBS, he served as a non-voting member of the Wealth Management Research investment committee, and as a capital allocator was responsible for all illiquid investing including fund manager selection and due diligence across the platform. Prior to UBS he headed product development & investment research at Citigroup Alternative Investments that managed over $75 billion of alternative investments across hedge funds, managed futures, private equity, credit structures, infrastructure and real estate. Here he led a team that developed proprietary models for portfolio strategy and asset allocation with alternative investments, provided investment support and research to pension plans, sovereign wealth funds, endowments as well as internal clients including Citi Private Bank. Before this he was with Cambridge Alternative Investments and SunGard (System Access) where he travelled to over 80 countries for work across Europe, Asia, Middle-East and Africa. He has written over 30 academic and practitioner articles on alternative investments with thousands of downloads at SSRN, presented at over a hundred industry conferences and has coauthored a book, Active Equity Management. Mr. Jain has multiple degrees in engineering, management, public administration and policy and is a graduate of Massachusetts Institute of Technology and Harvard University. He is a recipient of the Alfred Sloan Fellowship and subsequently was a Fellow of Public Policy and Management at the Harvard Kennedy School of Government for a year. He holds Series 7 and 66 securities licenses.

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