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HK MTR Moves Toward Privatization
Financial Secretary of the Hong Kong Special Administrative Region government Donald Tsang announced Monday that the government will privatize the Mass Transit Railway Corp. (MTR) by selling 20 percent of its stake.
The MTR Privatization Share Offer, structured as a global offering, will be aimed at retail investors in Hong Kong and domestic and international professional and institutional investors, Tsang said.
The initial price range has been set at 8 to 9.38 HK dollars per share for the initial public offering (IPO) which will open on September 25.
To encourage small-scale investors to apply, the government will give them a 5.25- percent discount for the IPO, with loyalty bonus shares to be issued in the ratio of 1:20 after one year and 1:15 after two years. Individual retail investors can get a discount of 5.25 percent for the IPO.
Tsang described the privatization of the MTR as a "milestone" since it will benefit the economy of Hong Kong and help enhance Hong Kong's status as an international financial center. Privatization of the MTR will reinforce the government's commitment to a free market and bring about further improvements in efficiency, productivity and flexibility of the MTR, he said.
The share offer of the MTR, the first for a major public asset in Hong Kong, also sets the precedent for possible privatization of other public of enterprises, Tsang said.
The listing of the MTR on the Hong Kong Stock Exchange will add quality and diversity to the stock market. Besides, it would generate considerable revenue for the government and help the government "reduce or even avoid budget deficit," Tsang said.
The MTR was set up in 1975 as an enterprise solely owned by the government. Over the past 25 years, the MTR has developed into an efficient and mature mass transit system.
Tsang announced in his 1999 budget speech the government's intention to privatize the MTR.
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