SOEs buying private companies

The SST reported:

THE GOVERNMENT will become one of the biggest players in the commercial property services market following Quotable Value’s (QV) takeover of DTZ.

QV has been in negotiations to buy the New Zealand arm of DTZ, a large publicly listed valuation and property management company based in the UK.

Neither company was responding to calls on the subject last week, but the Sunday Star-Times understands that DTZ’s staff have been told the takeover will proceed and both sides have been putting the finishing touches to the deal.

QV is a state-owned enterprise and its takeover of DTZ will create a property services company with turnover of nearly $70 million, making its easily the biggest property services company operating in the commercial property market.

While in one sense it is good to see an SOE operating commercially and making good commercial deals, it concerns me that they do so with taxpayer money, and an implicit Government guarantee.

Much the same happened when Kordia purchased Orcon. A smart strategic buy for Kordia, and some useful finance for Orcon, but should the NZ Government own an ISP and a commercial property company?

The Government has promised not to see any SOEs during this term. I hope that they have a more flexible policy for the 2011 election, which would allow the Government to exit areas that are commercially competitive.