One local, three foreign investors interested in PSX
Shanghai exchange, Pakistan-Kuwait Co, others may acquire up to 40% stake.
Owned by 200 members, the erstwhile KSE was incorporated as the country’s first stock exchange in 1949. PHOTO: REUTERS
KARACHI:
One Pakistani and three foreign investors have expressed their interest in acquiring a stake of up to 40% in the Pakistan Stock Exchange (PSX), a source with direct knowledge of the affair told The Express Tribune on Friday.
Shanghai Stock Exchange (SSE), which is one of the two bourses operating in China, is interested in obtaining a substantial shareholding in the unified national bourse, he said.
KSE-100 index at all-time high as Pakistan upgraded to emerging markets status
In addition to the SSE, a consortium of three financial institutions, which includes “one of the leading stock exchanges of Europe”, has also shown interest in purchasing a strategic stake in the PSX.
A private equity fund of international repute is also in the race to become a major stakeholder in the national stock exchange, he added.
“A delegation of the PSX is scheduled to go abroad in the week beginning on July 18 to hold one-on-one meetings with potential foreign strategic investors,” he said.
The only local player that has expressed interest in buying up to 40% shares in the PSX is Pakistan-Kuwait Investment Company, a development financial institution (DFI) that funds “economically viable and technically feasible projects.”
Representatives of the PSX will also meet three to four other potential international investors that have yet to formally submit their expressions of interest, he said.
Earlier, the managing director of the PSX had named Borsa Ýstanbul, Qatar Stock Exchange and London Stock Exchange as potential strategic investors.
Owned by 200 members, the erstwhile Karachi Stock Exchange (KSE) was incorporated as the country’s first stock exchange in 1949.
It became “demutualised” in 2012, which ended its long-held status of a so-called exclusive club by segregating the majority ownership from the right to trade on it. The KSE became the PSX at the beginning of 2016 when Islamabad and Lahore stock exchanges merged with it.
After conducting a revaluation of KSE’s assets and liabilities at the end of 2011, its shareholders or “members of the exchange” had received slightly more than four million ordinary shares of Rs10 each equally.
MSCI reclassification: Has the stock exchange become more vulnerable?
Of these shares, 40% were transferred into the members’ Central Depository Company (CDC) accounts while the remaining 60% were deposited in a blocked account at the CDC.
The regulators will make available 40% out of the 60% blocked shares for purchase to a “strategic investor,” who will then have management control.
Any aspiring strategic investor eyeing a 40% stake in the PSX can be a stock exchange, depository company, derivatives exchange or clearing house of international repute. It is supposed to bring fresh investment as well as latest technologies and products to the PSX.
The rest of the blocked shares - which amount to 20% of the total stake - will then be offered to the general public through an offer for sale, making the PSX a publicly listed company.
Hence, the group of 200 KSE brokers, which originally owned 100% shareholding in the bourse, will receive the proceeds of the sale of 60% shares. They will retain the remaining 40% stake in the PSX.
No one was immediately available for comment from the PSX, as the exchange was closed on Friday on account of Eid holidays.
Published in The Express Tribune, July 9th, 2016.
One Pakistani and three foreign investors have expressed their interest in acquiring a stake of up to 40% in the Pakistan Stock Exchange (PSX), a source with direct knowledge of the affair told The Express Tribune on Friday.
Shanghai Stock Exchange (SSE), which is one of the two bourses operating in China, is interested in obtaining a substantial shareholding in the unified national bourse, he said.
KSE-100 index at all-time high as Pakistan upgraded to emerging markets status
In addition to the SSE, a consortium of three financial institutions, which includes “one of the leading stock exchanges of Europe”, has also shown interest in purchasing a strategic stake in the PSX.
A private equity fund of international repute is also in the race to become a major stakeholder in the national stock exchange, he added.
“A delegation of the PSX is scheduled to go abroad in the week beginning on July 18 to hold one-on-one meetings with potential foreign strategic investors,” he said.
The only local player that has expressed interest in buying up to 40% shares in the PSX is Pakistan-Kuwait Investment Company, a development financial institution (DFI) that funds “economically viable and technically feasible projects.”
Representatives of the PSX will also meet three to four other potential international investors that have yet to formally submit their expressions of interest, he said.
Earlier, the managing director of the PSX had named Borsa Ýstanbul, Qatar Stock Exchange and London Stock Exchange as potential strategic investors.
Owned by 200 members, the erstwhile Karachi Stock Exchange (KSE) was incorporated as the country’s first stock exchange in 1949.
It became “demutualised” in 2012, which ended its long-held status of a so-called exclusive club by segregating the majority ownership from the right to trade on it. The KSE became the PSX at the beginning of 2016 when Islamabad and Lahore stock exchanges merged with it.
After conducting a revaluation of KSE’s assets and liabilities at the end of 2011, its shareholders or “members of the exchange” had received slightly more than four million ordinary shares of Rs10 each equally.
MSCI reclassification: Has the stock exchange become more vulnerable?
Of these shares, 40% were transferred into the members’ Central Depository Company (CDC) accounts while the remaining 60% were deposited in a blocked account at the CDC.
The regulators will make available 40% out of the 60% blocked shares for purchase to a “strategic investor,” who will then have management control.
Any aspiring strategic investor eyeing a 40% stake in the PSX can be a stock exchange, depository company, derivatives exchange or clearing house of international repute. It is supposed to bring fresh investment as well as latest technologies and products to the PSX.
The rest of the blocked shares - which amount to 20% of the total stake - will then be offered to the general public through an offer for sale, making the PSX a publicly listed company.
Hence, the group of 200 KSE brokers, which originally owned 100% shareholding in the bourse, will receive the proceeds of the sale of 60% shares. They will retain the remaining 40% stake in the PSX.
No one was immediately available for comment from the PSX, as the exchange was closed on Friday on account of Eid holidays.
Published in The Express Tribune, July 9th, 2016.