| Elena Titova | ||||||
The international strategic investor has become and will continue to be the key figure in eastern European privatization. After a decade trying to adapt the principle of privatization to the region's needs, investment bankers and governments have concluded that the most effective sales have involved transferring a substantial equity stake to a foreign company.
The investor must also receive a guarantee of management control, whether or not it holds more than 50% of the shares. This has proved to be the only way to attract the managerial and technical expertise needed to transform loss-making state enterprises into efficient, competitive companies. Strategic investors are also able to make the capital commitment needed to modernize factories and equipment that are mostly many years out of date.
"The only form of privatization that has clearly contributed to the post-privatization performance of enterprises is the sale of assets to strategic investors," says the OECD.