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    Pricing & Share Allocation

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    How do you explain the highly politicized nature of share issue privatization (SIP) pricing and share allocation policies? Are governments maximizing offering proceeds, or are they pursuing primary political and economic objectives?

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    Share issue privatization is the selling of shares on the stock market. The highly politicized nature of share issue privatization pricing refers to selling underpriced shares on the stock markets. The objective of selling underpriced shares is to get higher initial return in the early stages of privatization. The government that decides on share issue privatization wants higher funds from the issue. This is required to achieve its political goals and meet its funds requirements. However, privatization decision is based on notions of competition, efficiency, and choice. Not only the party in power but the party in opposition is also interested in pricing of share issue ...

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