4.4 NIFs as investors


The funds obtained from the sale of shares in companies included in the privatization programme were used to finance the NIFs current activities and new investments. These investments were both short term (debentures, shares of stock-exchange companies) and long term (venture capital), and in 2000 their total value amounted to 553.66 million zloty, or US$138.4 million (Parkiet, 2001, p. 16). This investment activity resulted in a significant change in the structure of the portfolios held by individual NIFs (Table 4.2). As can be seen, for the majority of NIFs new investments constituted well over 40 per cent of their portfolios, showing that the restructuring and privatization of the companies taken over from the State Treasury were advancing well and that the NIFs were able to concentrate less on restructuring and more on investment. Since 2001 venture capital investment has become one of the main strategic activities of all NIFs.

Table 4.2: Structure of NIF investment portfolio, end 2000 (per cent)
 

Shares in companies taken over from the State Treasury

New investment

NIF Fund 1

59.2

40.8

NIF Drugi

65.7

34.3

NIF Jupiter

50.6

49.4

NIF Progress

50.6

49.4

NIF Victoria

66.6

33.4

NIF Magna Polonia

56.8

43.2

NIF 7

86.6

13.4

NIF Octawa

61.0

39.0

NIF Kwiatkowski

30.0

69.9

NIF Foksal

84.6

15.4

NIF Piast

89.9

10.1

NIF Zachodni

47.8

52.2

NIF Fortuna

45.2

54.8

NIF Hetman

51.2

48.8

The future course of the NIF programme has yet to be determined. Some commentators consider that the NIFs should continue their restructuring mission, others recommend that some of the NIFs be amalgamated in order to reduce their costs, and many propose that the shares of the companies taken over from the State Treasury be reduced to 8 “10 per cent of the NIFs assets. In practice the latter would mean that the NIFs would be transformed into closed investment growth funds (Figure 4.3).

click to expand
Figure 4.3: The evolution of NIFs

Notes : The table lists the names of funds as they appeared in public turnover . The 1999 amalgamation of the third and eleventh funds yielded NIF Jupiter and reduced the number of funds from 15 to 14.

Source: Based on Parkiet (2001).

Investment in new ventures does not necessarily mean investment in start-up projects. What the author refers to here are the ventures that were established before being taken over by the NIFs, were well-managed, guaranteed future high return rates but still needed sufficient investment. These were the reasons for the NIFs to exert proprietary control over them for the next three “five years .

The strategy of investment portfolio renewal arose for two reasons. The first was the completion of the NIF portfolio companies restructuring and the second was the need to increase the NIFs value for their new shareholders, namely national and foreign banks and foreign investment funds. Owing to the fact that capital markets (the Warsaw Stock Exchange) offered prices that were too low in relation to the book value of the NIFs shares (including the value of the NIFs owned liquid assets: cash flows, public companies shares and guilt-edged securities), one of the most important goals of the NIFs was to decrease the above gap.




Change Management in Transition Economies. Integrating Corporate Strategy, Structure and Culture
Change Management in Transition Economies: Integrating Corporate Strategy, Structure and Culture
ISBN: 1403901635
EAN: 2147483647
Year: 2003
Pages: 121

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