The business of Packages Limited and FPCL is similar in nature and as per 2018 annual audit report, Packages has sound financials with sufficient capital reserves to fund its investment ventures. PHOTO: FILE
ISLAMABAD: The government has allowed Packages Limited to arrange foreign exchange overseas for acquiring 8.5% additional shareholding in Flexible Packaging Convertors Limited (FPCL) of South Africa due to the current foreign exchange constraints, documents show.
According to the Finance Division, Packages Limited had approached the State Bank of Pakistan (SBP) through its authorised dealer Habib Bank Limited, seeking approval for the acquisition of additional 8.5% stake in FPCL through its wholly owned subsidiary, Anemone Holdings Limited (AHL), Mauritius by enhancing the existing $15 million standby letter of credit by $2.7 million.
In order to liberalise the country's economy and move towards deregulation, the federal cabinet, in a meeting held on May 16, 2001, approved the Finance Division's proposal for allowing equity-based investment abroad by resident Pakistani companies.
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According to the laid-down criteria, cases of the private sector would be dealt by the SBP and decided by the Economic Coordination Committee (ECC) of the cabinet. However, this rule was subsequently amended by the ECC in its meeting on August 29, 2002, when it was decided that proposals for up to $5 million would be approved by the central bank.
FPCL deals in highly specialised printing and packaging solutions and holds about 6% share in the South African flexible packaging market.
On October 29, 2014, the ECC allowed Packages Limited, which also provides packaging solutions, to pour investment into FPCL up to a maximum of $15 million. Packages Limited accordingly acquired 55% shares in FPCL through AHL, Mauritius.
South Africa places no restrictions on foreign investors interested in acquiring companies or businesses, and allows non-residents to transfer capital freely.
The business of Packages Limited and FPCL is similar in nature and as per 2018 annual audit report, Packages has sound financials with sufficient capital reserves to fund its investment ventures.
The State Bank has evaluated the Packages Limited's proposal and found it consistent with the policy regulations for equity investment abroad.
The Finance Division told the ECC in a recent meeting that since the acquisition of additional 8.5% shares would take aggregate investment of Packages Limited to $17.7 million, the ECC's approval was solicited with the stipulation that due to the current foreign exchange constraints, the company may arrange foreign exchange from abroad.
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The ECC considered the proposal and gave the go-ahead with the stipulation that Packages Limited may arrange foreign exchange overseas as required for the investment.
Published in The Express Tribune, November 16th, 2019.
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