The Cabinet Committee on Privatisation (CCOP) approved the strike price of Rs110 per share to offload the government’s remaining 131.3 million shares in ABL, said Privatisation Commission Chairman Mohammad Zubair, while sharing details of the deal with media persons.
ABL is already in private hands and the government earned Rs72 million in dividends on its investment in the bank in the last financial year. It has projected a dividend income of Rs75 million for the current year.
Zubair said with the sale of the remaining shares, the government had no stake left in ABL.
The floor price had been set at Rs105, giving a 7.6% discount over the previous day’s trading in the stock market, said Zubair. The final offer was Rs5 per share higher than the floor price, yielding an additional Rs656 million.
By selling the stake at Rs110 per share, the government gave only a 2.7% discount over the last trading session’s closing price of Rs112.75.
It was the lowest discount given by any country and even less than that offered by Malaysia in similar transactions, Zubair remarked.
The Privatisation Commission had advanced the book-building process by 24 hours in an attempt to avoid the adverse impact of the Pakistan Tehreek-e-Insaf’s strike call in Karachi. Originally, the book-building process had been planned for December 11 and 12.
Of the shares on offer, 47% were bought by local institutions, 13% by foreign institutions and the remaining 40% by high net worth individuals.
According to Zubair, there was a fine mix of local and foreign exchange components in the orders placed for the shares. The response from both home and abroad was encouraging and the transaction was completed in a record 19 working days.
“The offer was massively oversubscribed as demand was placed for 185 million shares, reflecting the overwhelming interest of investors.”
He said the success of the share sale showed the increasing confidence of investors in government’s policies.
Next month the government will offer Pakistan Petroleum Limited’s (PPL) shares to the general public. It has already completed the PPL transaction and raised Rs15 billion by selling shares to foreign and domestic institutions but decided to sell some more to the general public at a later stage.
The country hopes to raise about $4 billion in privatisation proceeds in the current fiscal year including the upcoming capital market share float of Habib Bank Limited (HBL), which will fetch roughly $1.2 billion.
Zubair said the Privatisation Commission board had also approved the hiring of financial advisers for the HBL share offer.
Under the privatisation law, 90% of privatisation proceeds have to be utilised for retiring public debt and the remaining should be used for poverty alleviation.
While the government remains successful in executing capital market deals, it faces some problems in selling the loss-making entities. This week it delayed the privatisation of Heavy Electrical Complex – the company that manufactures power equipment.
The Privatisation Commission has also extended the deadline, for the second time, for the Expressions of Interest sought to hire financial advisers for the privatisation of Pakistan Steel Mills. The original date was November 28, which was first extended to December 12 and now by another two weeks.
Zubair termed PSM one of the most complex privatisation processes and said the government wanted to hire a consortium of financial advisers that could handle it accordingly. However, the second extension in the deadline shows that the interested advisers were reluctant to come forward.
Published in The Express Tribune, December 13th, 2014.
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I foresee that Imran Khan's youthias will give credit of this success too to their Lifetime Chairman!
This was bound to happen. We may call it 'day light robbery' as Pakistan will be stripped of its valuable assets at the hands of very "honest, hardworking and dignified" politicians. They are in the habit of taking Pakistan as a business empire. Well, I personally have no objection to that. If Pakistan is a business empire, its certainly not a 'sole proprietorship' one wherein the assets are succeeded by the heirs and profit is pocketed personally pursuing individual interests.
Rather it is a 'public limited company' whereby public/nation is the shareholder/stakeholder and has the 'voting' rights to bring in directors/MNAs/Parliamentarians who elect a CEO/Prime Minister. But, they all work in the interest of 'shareholders/nation' and can be removed and even impeached if they fail to do so. Shareholders/nation and directors/Parliamentarians can object to decisions that are made against their Memorandum and Articles of Association / Constitution and even ouster the rogue CEO as the he has no 'immunity' for 5 years. Any suitable director can be voted a new CEO and nobody has to wait 5 years.
Even a small organization such a Public Limited C. has laws, but a huge country like Pakistan is living without any. You can sell national assets to yourself and make a livelihood out of it for decades to come while we just sit agape and see you grow and you alone.
No wonder, Pakistan has made its place at # 12 on the list of countries exposed to extreme political risk because managers of the country have other interests to pursue and have their own axe to grind. The have no interest in maximizing the profits/dividends for you or cutting the organizational costs. Best of luck to us shareholders! you will not get any dividends for years to come, the EPS is rather low and you can't obviously get out of it (unless you choose the right managers for the country). This public limited co. is at the verge of 'Leveraged Buyout' with a gigantic external and internal debt, the zeros of which may be compared to the stars in the galaxies.
@Parvez:
Agreed. And who were the "High Networth Individuals" who got 40% shares of the profitable bank at a discount?
@Blithe:
Einstein, the government had only an 11.5% stake, which does not give them any "control" over "credit and collateral" decisions". Ever heard of credit rating agencies?
The Naan League CONTROLS the public finances, which gives them full control to favour "certain" people. Tell me, are you getting commissions from the coal projects?
Selling a profitable organization is easy and does not make sense........mr. Zubair please earn your fabulous salary by privatizing PIA and Pak Steel.
Keep selling , this government will sell Pakistan one day
It's good to privatize banks and keep govt totally our of credit and collateral decisions, lest they negatively influence the process of lending to favour certain people .