G4S Pakistan buyout to be done in two weeks

Deal expected to be much lower than reported $10 million: Sehgal.

KARACHI:

One of the few businesses that should understandably thrive amidst terrorism, bank robberies, kidnappings and extortion is private security. However, it seems to have lost its appeal in Pakistan, as a leading foreign security company has decided to sell its local operations to its Pakistani partner.

G4S, which operates in the country as Wackenhut Pakistan Limited, is going to pull out of the market by selling the business to its chairman in the region for about $10 million, the UK-based Financial Times recently reported.

However, Ikram Sehgal – who serves as chairman of G4S’s Pakistani operation – called the amount of $10 million “speculative” while talking to The Express Tribune.

“I’m not going to reveal the actual figure, but it’s nowhere near $10 million for sure. The reported figure is simply wrong. A consortium of banks is helping us carry out the deal,” he said, while contradicting the Financial Times’ claim, which was also repeated in a subsequent story by international news agency Reuters.

Sehgal said the buyout was a result of “hostile government policies towards foreign security companies.” He said it had now become difficult for foreign security firms to operate in Pakistan under constant hostility from the government while a number of security companies operated with no government licence at all.

Sehgal, who already has a 50% stake in the business, added that there were no other contenders for the business, as he had the right of first purchase because of his current association with the company.

The company employs over 11,000 personnel with a major concentration in Karachi, Islamabad and Lahore. Its major customers are multinational companies and banks, according to Sehgal. It also employs roughly 150 women guards. “The deal is expected to take place within the next 14 days,” he added.

According to the Financial Times report, the decision of G4S to exit the Pakistani market is in line with its strategy of making smaller disposals of less profitable businesses while expanding its footprint in emerging markets.

“The government doesn’t allow foreign companies to take part in private security business,” said All Pakistan Security Agencies Association (APSAA) Chairman Brigadier (retired) Rashid Ali Malik while talking to The Express Tribune.

Wackenhut and Brink’s used to be the only foreign security companies in Pakistan, which received their licences at least 20 years ago, according to Malik. Brink’s -- which had a licence to provide Pakistani financial institutions with cash in transit service -- became Phoenix some years ago. The other foreign security company, G4S, is now being made to pull out of Pakistan while leaving its business to its Pakistani partner, Wackenhut Pakistan Limited, Malik added.

A report published in The Express Tribune on July 5, 2010, said 300,000 private security guards worked in Pakistan, almost equal to all active-duty personnel in the paramilitary forces.

Published in The Express Tribune, August 26^th, 2012.