Mexico to Privatize 30 Firms, Offer Them on Stock Market

Mexico will sell up to 30 state-owned companies to the public on the Mexican Stock Exchange, according to a highly placed government official.

Announcement of the companies involved is expected within a month.

Taking the companies public would accomplish two goals of the Mexican Administration: continued reduction of the state’s role in the economy and strengthening of the stock market.

The addition of 30 new issues would increase the exchange’s actively traded stocks by half, helping to cool a market that some investors and regulators worry has grown too hot in the early months of this year.

Market regulators have said previously that they would like to see the stock exchange participate in divestitures of state-owned companies that are large enough and financially strong enough to be appropriate candidates for public offerings.

However, they said they would be reluctant to offer the investing public shares in troubled companies.

The form the offerings will take has not been disclosed.

Numerous forms have been utilized in the past.

Two years ago, the government sold on the exchange 34% of the stock in seven of the strongest state-owned banks. Those sales were actually voteless shares called investment participation certificates, or CAPs, the initials of their Spanish name.

Mexicana Airlines was first sold to a group of investors, who then made a public offering, selling part of their interest in the company in order to raise capital.

Another state-owned company, Telefonos de Mexico, is already publicly traded, although the government owns controlling interest. Market regulators and brokers say they expect to play an active role in the sale of the government’s interest in the telephone company.

In addition, state-owned companies--notably Petroleos Mexicanos, the oil monopoly--are active in the bond and commercial paper markets.