Pakistan ‘prioritising Chinese consortium’ in PSX stake sale

Consortium wants more than just 40%, seeks some assurances as well

KARACHI: Pakistan is prioritising Chinese strategic investors when it comes to selling majority stake and management control in the Pakistan Stock Exchange, an official close to the development said Friday.

On the other hand, the consortium - which consists of the Shanghai Stock Exchange, Shenzhen Stock Exchange, one Chinese fund and Habib Bank Limited - is eager to buy the stake as well but it was yet to submit its bid till the filing of this report.



The delay comes as the Chinese seek special incentives and remain in negotiations with the PSX and its regulator, the Securities and Exchange Commission of Pakistan (SECP).

Muzammil Aslam, CEO at Invest and Finance Securities, said that Chinese investors are demanding more than the 40% stake up for grabs. Secondly, they want the management to give them guarantees that they would not be liable to pay any outstanding claims due on the part of brokers who currently own the 40% stake.

“Pakistan is giving top priority to the Chinese investors because they are the ones who have expressed a keen interest in acquiring the PSX stake and are expected to offer the best price,” he said.

“The SECP had sent forms to the brokers to inquire whether they want to divest the 40% stake (this is in addition to the 40% stake already being sold). Many brokers have agreed to sell their remaining shares as well.” He said there are reports that the government has agreed to give the Chinese consortium a 51% stake against the original plan of divesting 40%.



However, it seems like the Chinese consortium wants more than that. “It usually happens. When countries float Euro bonds, they end up raising more money than the original target,” he said. The PSX, in a statement Friday, said the Divestment Committee has started receiving bids for the sale of 40% equity stake of PSX from Thursday. The bids will be received till 4pm on December 22 and shall be opened at 5pm the same day.

Earlier, the PSX received at least three bids from a foreign consortium led by UK funds and two domestic banks.

Published in The Express Tribune, December 17^th, 2016.

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