Govt green lights PC's plan to sell UBL shares

CCoP approves roadshows for Privatisation Commission to seek out potential buyers for UBL shares.

ISLAMABAD: A day after the Privatisation Commission proposed a plan for offloading the remaining shares of United Bank Limited (UBL), the Cabinet Committee on Privatisation (CCoP) accorded its approval for the plan.

Headed by Finance and Privatisation Minister Ishaq Dar, the CCoP gave its approval to the proposed transaction structure, which was earlier approved by the Privatisation Commission Board. The Privatisation Commission Board has constituted a transaction committee to oversee the overall transaction process.

PC chief Mohammad Zubair informed the CCoP that the transaction structure envisages offering the government of Pakistan’s shares to both international and domestic institutional investors and high net worth Individuals (HNWI), through an integrated international book building exercise. He said that the transaction is expected to be completed by June 30 and it will be first equity transaction by the Privatisation Commission in the last eight years.

Dar said that due diligence has to be observed during the whole process and directed the Privatisation Commission to maintain transparency and fairness at all levels of the transaction. He added the Commission should not compromise on principles of transparency and fair price for the transaction.

The finance minister added that the reform process undertaken by the government will also help in the successful and transparent completion of the process as Pakistan has already made successful entry in the international capital markets.

The CCOP had on Friday approved a proposal of offering 160 million as base shares to both international strategic investors and local investors. In terms of volume, the government owns 241 million shares in the UBL. The federal government has already sold 80.2% shares in UBL. General Pervez Musharraf’s government had raised Rs53 billion by selling UBL’s shares through three separate transactions, which were carried out from 2002 to 2007.

On Friday, UBL’s shares were traded at Rs172.47 – up by Rs1.23 from the previous day. On current value, the government expects to raise Rs41.6 billion ($422.1 million). However, any change in the price of UBL’s share during the next three weeks could impact the strike price.

In order to fetch a good price, the CCoP has also allowed the PC to hold road shows in seven international cities from next week to lure the international and domestic investors. The PC hopes that about 90% shares will be bought by the foreign strategic investors.

UBL is one of eight entities that the government has identified for the first phase of privatisation.

While the government is set to complete the UBL transaction, the IMF has added a new structural benchmark to fast track the government’s privatisation programme for the Oil and Gas Development Company. While addressing the press conference here on Saturday, Jeffery Franks, the IMF’s Mission chief to Pakistan, said that new structural benchmark was consistent with the broader IMF programme and the Fund did not impose any new condition.

Dar maintained that due to delay in seeking necessary approvals, the OGDCL transaction will not be completed in the current fiscal year, which will end in June.

He hoped the deal will now be completed by July. The government is aiming at raising $850 million by selling 10% shares of the OGDCL.