Government to float PPL shares in bourses

PC board allows appointment of manager for the transaction.

ISLAMABAD:

The government has decided to partly offload its shares in Pakistan Petroleum Limited (PPL) to raise capital for further growth in business, after the company stock surged in market trading on Wednesday.

At a meeting on Wednesday, chaired by senior member of the Privatisation Commission (PC) board, Iftikharul Haq, the board allowed PC to initiate the process for appointment of a lead manager - an investment or commercial bank - for the secondary public offering of the company.

The prospective lead manager will set recommendations pertaining to relevant modalities for the transaction, including offer size and price, in consultation with stakeholders for further consideration by the PC board and the Cabinet Committee on Privatisation.

Shares of PPL were traded at Rs210.04 per share at the Karachi stock market on Wednesday, a gain of Rs3.83 over Tuesday’s close. The government has a 70.65 per cent stake in the company that contributes one-fourth of the total gas supply in the country. Around 21.59 per cent shares are with private investors and 7.76 per cent with employees.

Under the secondary public offering (SPO), private investors will have priority rights on the shares, provided they are willing to buy at the rates set.

PPL was listed on the Karachi Stock Exchange in 2004 and 15 per cent of its shares were successfully divested through an initial public offering (IPO) at an offer price of Rs55 per share, which yielded Rs5.63 billion in proceeds.

The board also recommended sale of majority shares in the Heavy Electric Complex and gave the go-ahead for inviting expressions of interest (EOI) in this regard. The privatisation committee will consider the board’s recommendation in its next meeting.

The board also approved KASB as financial adviser for the National Power Construction Company (NPCC).

The board, however, could not decide on the IPO of Government Holdings Private Limited (GHPL) in the stock market, due to a dispute over legal and financial issues of the company.

The board also reviewed progress made so far in appointing a financial advisory consortium for the issuance of Oil and Gas Development Company (OGDC)’s exchangeable bonds, for up to 10 per cent of government’s shareholding, which comes out as 430 million shares.

The board was told that the commission has received EOIs from four consortia, who have been asked to submit technical and financial proposals by April 29. The government wants to raise up to $1 billion by floating OGDC shares in the international market to solve the inter-corporate debt problem.

Published in The Express Tribune, April 21^st, 2011.