ISLAMABAD, 30 September — As Oct. 10 national elections loom large on the national horizon, Pakistan has gone for a fast track privatization and sale of state enterprises in which Gulf and Middle East investors are showing keen interest in sectors ranging from banking to telecom.
Just in the banking sector, two major institutions have already gone to Gulf and Middle East investors in the month of September alone. The first to be taken over by the Abu Dhabi Group and Bestway Holdings Ltd. Consortium (ADG-BHL) in September was 51 percent share and management control of the United Bank Ltd. (UBL). It cost the group Rs.12.35 billion for the take over of Pakistan’s fourth largest bank that has a nine percent market share. In case the group performs well over the next two years, it will qualify to bid for the remaining 49 percent shares.
The latest acquisition for Rs.620.1 million by the Abu Dhabi Group of UAE is 28 percent shares of the Dubai-based Bank Alfalah last week. It already has 70 percent shares in the bank, that it acquired in 1997 in open bidding for the institutions that was previously known as Habib Credit and Exchange Bank. The new acquisition was allowed by the government’s Privatization Commission (PC) at Rs.27.56 per share, against the floor price of Rs.26.56, for 21 million shares. This was the highest bid.
The other bidder that had been pre-qualified for the sale, Javed Omer Vohra & Company, did not improve its own previous bid and lost the deal to ADG. The PC has allocated the remaining 2 percent shares of Bank Alfalah for purchase by the bank’s employees. In case the employees don’t pick up the shares, these will be sold to the ADG.
The government of Pakistan is pleased over selling UBL and Bank Alfalah to Gulf-Middle East investors. The Cabinet Committee on Privatization (CCoP), chaired by Finance Minister Shaukat Aziz, in a statement approving the sale of shares to Alfalah noted “with satisfaction, the confidence shown by investors, in the investment climate in Pakistan.”
Acquisition of UBL by a consortium of overseas Pakistani group in partnership with Gulf-Middle Eastern investors will send a strong signal to other investors and overseas Pakistanis to look at investment opportunities in Pakistan. These large investments by Gulf-Middle East and overseas Pakistanis in this country, just before the Oct. 10, 2002 elections demonstrates the investors’ confidence in continuation of policy of privatization in Pakistan,” CCoP said.
The CCoP also sold Thatta Cement Factory located at Thatta, in Southern Sindh province to Pakistani investors Iqbal Ali Mohammad & Consortium for Rs.718 million in an open bid. “ Investment by local investors in Thatta Cement is evidence of revival of investors’ confidence in the country’s economy and improving law and order situation,” CCoP pointed out.
The CCoP also has sold Lot-A of Investment Corporation of Pakistan (ICP) shares to ABAMCO for Rs.175 million. Six bids were received for this transaction, both from domestic and foreign investors. ABAMCO will manage the ICP funds, under rules prescribed by the Securities and Exchange Commission of Pakistan (SECP). Lot-A includes twelve mutual funds.
The PC also held bidding for sale of 75 percent government-owned shares of the Lyallpur Chemical & Fertilizers Ltd. (LC&FL). The bidding opened with Rs.120 per share floor price. Bidding could not proceed as two participants — Chanar Sugar Mills Ltd., Lahore and Sitara Chemical Group of Industries, Faisalabad — did not improve their offers because of which the PC postponed the sale.
Several more entities or their management control and shares have now been put on sale. The committee has approved sale of the remaining government-owned shares in Pakistan Oilfields (POL) and Attock Refinery Limited (ARL), located at Rawalpindi, through Pakistani bourses.
