The Australian Financial Review (AFR) has reported on an interview conducted with the chairman of the Australian Competition and Consumer Commission (ACCC), Mr Rod Sims. In the interview Mr Sims has called for the Abbott-led Federal Government to sell-off and privatise government-owned assets including Australia Post and Medibank Private and to encourage the states to do likewise with their state-owned energy companies.
The sale of these assets would be a windfall for government coffers and could also add some significant businesses to the stock market should privatisation result in an ASX listing.
As investors saw with the recent privatisation of Royal Mail in the UK, there is certainly demand from investors for freight and logistics assets that boast substantial scale. A privatisation of Australia Post would also draw attention to Toll Holdings (ASX: TOL), both in terms of relative valuation and because of the threat from increased competition by Australia Post in private hands.
According to the AFR, Australia's largest health insurer Medibank Private was valued during John Howard's term as Prime Minister at $4 billion. With private health insurance premiums on the rise, coupled with an aging population and NIB Holdings (ASX: NHF) currently the only option for investors looking to gain listed exposure to the sector, a listing of Medibank Private would be welcomed by investors.
Mr Sims also took aim at Queensland's continued ownership of power generation and energy retail assets. While many states have completed or are nearing completion of privatising their energy assets, Mr Sims argued that efficiency and productivity gains and lower prices could be delivered through further privatisation. Whether the ACCC would look favourably on Origin Energy (ASX: ORG) and AGL Energy (ASX: AGK) picking up any privatised assets is hard to say, however both firms would be impacted either way by further privatisation.
Foolish takeaway
Many government assets which have been privatised and found their way onto the ASX have turned out to be high quality investments. Three standouts are the Commonwealth Bank (ASX: CBA), CSL (ASX: CSL) and Aurizon (ASX: AZJ). Any opportunity investors get to purchase government-owned assets is well worth investigating.
