The basic requirements for privatisation transactions are that they must be transparent, at arm’s length and guided by market and economic valuations. In order to fulfil the requirement for transparency, entities to be privatised must be advertised in the print and electronic media.
The privatisation process may involve the following steps:
- Approval of Privatisation List: After Cabinet approves the list of entities for privatisation, which have been ranked and prioritised, the Privatisation Agency will implement the privatisation programme. The list of assets to be divested would be publicised indicating their state of readiness.
- Appointment of Enterprise Teams: Cabinet or the Privatisation Committee of Cabinet or
the relevant Ministry/Agency will appoint an Enterprise Team for each privatisation, as
recommended by the Privatisation Agency.
- Approval of Privatisation Strategy: The Enterprise Team approves the appropriate method
for privatising the entities, in accordance with the Government of Jamaica’s objectives for
privatisation, and the policy relating to the ownership of assets. The selected modality and
strategy is submitted to the Privatisation Committee of Cabinet for consideration and
approval. After the Privatisation Committee’s approval, Cabinet will indicate final approval.
- Information Memorandum or Request for Proposals (RfP): Once the modality and/or strategy is approved by Cabinet, the Privatisation Agency will prepare an Information Memorandum (IM) or Request for Proposals (RFP) document, which includes background information on the entity’s operations and financial performance, as well as the bidding process and evaluation criteria.
- Valuation: The Enterprise Team will commission a valuation of the asset/enterprise to be privatised. The Enterprise Team, at its discretion, may require a second valuation, provided that the cost to do so is not prohibitive.
- Pre-marketing: The Government of Jamaica, through the Enterprise Team will be allowed to pre-market the opportunity to targeted prospective investors, prior to the commencement of the Bidding Process. The opportunity should only be pre-marketed when the Government is in a position to proceed with the privatisation of the asset.
- Advertisement of Opportunity: The privatisation opportunity must be given the widest possible exposure within the context of limited funding. The Privatisation Agency will advertise the sale or lease of the entity via local and/or overseas media including print and electronic media. The advertisement period will depend on the type and state of the asset, complexity of the transaction and the Enterprise Team’s decision, however the duration should not be less than one month. The advertisement will include a submission deadline date for the proposals or bids and indicate that an IM or RFP is available.
- Bid Bond: The Enterprise Team may require bidders/prospective investors to submit a “good faith deposit” or bid bond along with their proposal.
- Evaluation: After the bids/proposals are submitted by the potential investors, they are evaluated by the Enterprise Team and ranked. The highest-ranked bid or proposal is recommended as the “Preferred Bidder”.
- Due Diligence: The Privatisation Agency conducts an independent due diligence exercise (e.g. credit checks, etc.) on the potential investors.
- Preferred Bidder: The Privatisation Agency submits a report recommending the Preferred Bidder to the relevant Ministry or Board of Directors of the owning Agency, as appropriate, then to the Privatisation Committee for approval. After receiving the requisite approvals, the selected bidder will be formally advised that they are the Preferred Bidder.
- Negotiations: After the relevant Board/Ministry and Cabinet approve the preferred bid or proposal, the Enterprise or Negotiating Team commences negotiations with the selected investor if necessary to finalise the privatisation terms and conditions, including price, payment plan, period of privatisation, options and the development plan, etc.
- Approval of Negotiated Privatisation Terms: The Privatisation Agency prepares a submission to its Board of Directors recommending the terms negotiated by the Enterprise Team, for approval.
- Closing: On receipt of approval from Cabinet, the Privatisation Agency will finalise the transaction, including execution of the required legal agreements.
