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| Posted By: KPLF Posted On: May 21, 2002 Views: 681 | TO Ethiopian Privatization Agency Ethiopian Privatization Agency invites prospective investors to submit bids for the partial or total acquisition of the shares of a number of share companies including for the following companies. EPA (Ethiopian Privatization Agency) USE only and out dated method to sale the following companies. Addis Block S.Co Brick Products S.Co Ethiopia Plastic S.Co Addis Ababa Tannery S.Co. Ethiopia Tannery S.Co Kombolcha Tannery S.Co Modjo Tannery S.C. Anbessa Shoe S.C. Tikur Abay Shoe S.C. Anbessa Shoe S.C. Addis Garment S.Co Akaki Garment S.Co Gulele Garment S.Co Housing Construction Enterprise Ethiopia Spice Extraction Enterprise Koka Dairy Farm 1. Bid Documents will be available in Room No. 606 of the Ethiopian Privatization Agency starting Monday, Appril 12, 2002, and interested bidders can obtain documents during working hours upon payment of non-refundable Birr 300 or the equivalent in U.S. dollars for each set of document. 2. Bidders shall submit bid bond in accordance with the instructions to Bidders. 3. Bids shall be submitted in wax-sealed envelopes on or before Thursday, July 23, 2002, 5:00 p.m. local time, addressed as follows: 4. The bids shall be open on Wednesday, July 24, 2002 at 10:00 a.m. local time in the Conference Room of the Ethiopian Privatization Agency, in the presence of bidders or their representatives. 5. The Agency reserves the right to accept or reject any or all bids. What is wrong with today method of selling our state owned company. This kind of biding takes time [from Appril 12, 2002 up to July 24, 2002 ] and it is difficult to find a right buyer. Local Bidders are very sophisticated bidder they might try to under value the state owned company buy bidding lower. Most local bidder know each other therefore they will not bid against each other After working in this business for last 30 years those individual bidder from groups.not to bid against each other. Those groups of bidder instead of biding against each other they will bid very low bid to make look like one of the bidder is actually bid higher when if fact it is their friend they are trying to help. When wax-sealed envelopes opened on Wednesday, July 24, 2002 at 10:00 a.m. local time you will see what I mean. You will see 100 bidder put their bid only under 100,000 birr which way below the market price. Off course they know EPD will not sale for 100,000 birr but they are doing this to break the price once the price break and EPD expectation lowered the bidder go for a kill. They will rise their asking price to 1 million EPD feel they are doing better because they are getting one million birr which is much better then 100,000 birr Those groups bidder are smart business people, therefore we should never underestimate them. YOU MIGHT tell me The Agency reserves the right to accept or reject any or all bids. This is where the groups bidders out smart the agency. Lets assume one or two outsider bidder bid 10 million birr which is a right market price. When the Agency open the wax-sealed envelopes on Wednesday, July 24, 2002 at 10:00 a.m. local time The groups bidder have a chance to bid one more time once they know the highest bid. If the groups bidder think the company worth more then 10 million birr they might over bid 10 million birr. Otherwise they move on to other bid. In short the real bid start on July 24, 2002. If EPA think the bid started on April 12, 2002 they are fooling themselves. How to avoid those crook bidder is not easy but EPA should try an open bidding system. As we can see the BID START only on July 24, 2002. Why waste our time from April 12, 2002 up to July 23, 2002. Why not put the same auction information like above. And make the auction open up to July 23, 2002 Let assume if you want to sell Brick product co. for 5.1 million this how the auction Info goes. Auction Info Current Bid: $150,000 birr Buy Price: $5.1 million birr High Bidder: Mr. A Available Qty: 1 # of Bids: 33 Started at: $100,000 birr Bid Increment: $10,000 birr Location: Addis Ababa Opened: Appril 12, 2002 Closes: July 23, 2002 ID #: 1234 Note:- Seller can close auction early. Auction may get automatically extended. There is a buy price on this auction of $5.1 million birr. This information should be updated daily and posted on EPD website for everyone to see. This way it might also attract Ethiopians investor who are living in America and Canada. Why I am doing this to those crook groups bidder? I believe business should be based on trust and honesty. Big America company spend billion dollars building their public image and to win the public trust. America Company value public goodwill. The same goes to our local groups bidder. It they are crook investor they will not go any further. Saying all this not all groups bidder are crook then again if GROUPS bidder are not crook then they should not afraid of open auction system. Closed auction system only help the bidder because EPD only know the higher bid on July 23, 2002. and only have a few hours to makeup your mind to accept or reject any or all bids. On the same token the groups bidder have time to gang up on EPA... I know it is hard to start new method of doing business... but I try hard to tell you my part. What is the better way? Lets say EPA want 10 million birr for Brick Products S.Co. Since EPA ONLY SALE 51% share of the co. 51% of 10 million birr would be 5.1 million birr Now it would be easy to find one investor or a group of investors to invest 5.1 million birr but we have 17 company to sale... This is the reason why most of the state owned companies could not find local buyer. Since EPA sale trying to sale the whole 51% share to one or groups of investor it is difficult to find that kind of local investors. When foreign investor buy state owned co. it looks like only one person buying the whole 51% share. What we dont know is 99.5% of foreign companies owned by million individual investor holding million of share in just one company. Lets go back to our example. Brick Products S.Co worth 5.1 million birr. The easy way selling this company is to sale it to million local investors instead of looking for groups of investors. How we can sale Brick Products S.Co to million local investors. Lets divided 5.1 million birr share in to 10,000 share that worth 510 birr. Now it is easy to find local investor that can invest only as little as 510 birr as big as 5.1 million birr. In this method we can sell all of the above company with no time. The good part is if I invest 510 birr in Brick Proudct S.Co. Today and want to sale my share tomorrow the other 10,000 shareholder are not going to be affected. All I should do is find someone to buy my share and sale my share instead of selling the Brick Product co. In this way Brick co. share might be sold and bought million time over without affecting Brick co, operation or management. Who can handle this job any bank should handle this job. In Canada bank underwrite those share. What underwrite means EPA should not sit and wait for 10,000 investor to buy Brick Product. Any Bank should underwrite Brick Product co. share that means a local bank will pay 5.1 million birr on spot to EPA and EPA job will be done with in a second. Once the bank underwrite Brick Product co. the local bank will notified local investor to invest a little as 510 birr or as big as 5.1 million birr. Lets assume after one year Brick product co. making profit and now worth 10.2 million birr that means my 510 birr share would be 1200 birr. The local bank every day post the rate for selling or buying Brick product co. share if people think next year Brick Product worth 3000 birr then they might be willing to pay 2000 birr instead of 1200 birr so the cycle of selling and buying will go forever. One more thing if Brick product lose money 510 birr share might go down or even lose everything but one investor only lose the amount of 510 birr only. |
| Posted By: Phd. Mulu Posted On: May 25, 2002 Views: 665 | RE: TO Ethiopian Privatization Agency KPLF, 100% I agree with you. It is time for Ethiopian Privatization Agency to do their business out in the open. Otherwise we will see the sale of state owned companies for much less then market price. Open bid is the way to go! |
| Posted By: Haimanot Posted On: Jun 2, 2005 Views: 433 | RE: TO Ethiopian Privatization Agency To Ethiopian Privatization Agency Would you mind to help me on something p/s? I want you to tell me method of privatization in ethiopia. |