PIA sell-off: PC kicks off process of picking financial adviser
As the government formally begins the process of hiring a financial adviser to sell its stake in Pakistan International Airlines (PIA), it has decided to pick a communication strategy firm as part of a consortium of advisers to meet the expectations of stakeholders.
Five international consortia, which were vying for appointment as the adviser, gave presentations to the Privatisation Commission (PC) on Tuesday.
Every consortium must have a communication strategy firm in its fold, which can frame a plan on how to manage expectations of people with the aim of carrying out PIA privatisation smoothly.
The government is facing resistance from opposition parties, particularly the Pakistan Peoples Party, which is opposed to the privatisation of PIA and Pakistan Steel Mills.
The PPP during its five-year stint hired thousands of loyalists in these state-owned enterprises and now wants to protect them.
The financial adviser will prepare a restructuring plan, resulting in partnership with the private sector in core operations of PIA. Separately, the government will hire a financial adviser to sell PIA’s two hotels in New York and Paris.
Under the $6.7-billion International Monetary Fund loan programme, Pakistan has committed to selling 26% shares in PIA to strategic investors. Initially, the deadline was June 2014, which has now been revised to June 2015.
The government was supposed to hire a financial adviser by December 2013, but the deadline was revised twice to June 2014. This target has also been missed.
“In the next two weeks, the Privatisation Commission will be able to hire a financial adviser for the strategic sale of PIA,” commented Mohammad Zubair, Chairman of the commission.
He said he was pretty comfortable with the consortia and an evaluation committee, responsible to recommend a consortium to the PC board, would now assess the technical and financial bids.
Zubair said PIA’s sell-off was not as simple as many believed and the adviser would have to do a lot of work including meeting expectations of all stakeholders.
The adviser will come up with a report on the technical and financial aspects of PIA after conducting due diligence.
Five international consortia have responded to the government’s advertisement. The first consortium comprises Jefferies – an international investment bank, ICF SH&E, which has been rebranded recently as ICF International, Shajar Capital, Charles Russell of the United Kingdom, Irfan & Irfan, BDO Ebrahim, Aon Hewitt and Consulum.
ICF International is a leading provider of consulting services and technology solutions. Consulum is an international communication strategist.
The second consortium includes McKinsey, MCB Bank, RIAA and Deloitte. The third consortium consists of EY of the UK, Seabury – a global advisory and investment bank, Haidermota BNR, Freshfields Bruckhaus Deringer, UBL, Excelerate and Mediators Private Limited.
The fourth consortium includes Rothschild – a financial advisory group, Oliver Wyman – an airline economic analysis firm, Mercer Consulting, Khalid Majid Rehman, Hassan Kaunain Nafees – a legal firm and Pinetree Capital.
The fifth consortium comprises Dubai Islamic Bank, IATA Consulting, which has expertise in aviation business, Deloitte, Haidermota BNR, Freshfields Bruckhaus Deringer, Abacus Consulting, APCO – a communication strategy firm and Prestige.
Published in The Express Tribune, July 2nd, 2014.
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COMMENTS (18)
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The govt should auction PIA through one of those game shows that are rampant over TV these days.
PIA will definitely got benefit by privatization. Merits appointments will open soon and political hires have to go back.
@wahab: No, he's a Pakistani-American. For these people it's a matter of pride that PIA owns this Roosevelt hotel. They can brag about it in their cocktail parties. The fact that PIA is bankrupt doesn't figure into the conversation.
I don't know what kind of business man will dare to buy a stake in a failing airline like PIA
@Naeem Khan Manhattan,Ks: You propose to keep the properties when airlines need cash to buy planes? Are you high?
PML_N has no right to sell national assets..
@Qadri the great: I think you missed your medication today.
Selling the hotels in New York and Paris is the craziest idea but it will be bought by some pals of Nawaz Sharif for throw away prices because it is owned by the State of Pakistan through PIA. If they want to sell the air line , fine but don't sell the property, these properties has been going up in prices every year but I would not be surprised if some inside deal is in works and some one is going to make some hefty commission under the table. I would suggest, to lease it out and not sell it out right. I remember that some Pakistani ambassador sold out Pakistan Consulate property in San Francisco long time ago and now the foreign office is regretting it or do they. Some one made money out of that sale too under the table.
@Qadri the great: were you fasting when you suggested that PIA buy a a 380 AIRBUS ..?
If PIA really to be handover to other Airline, that will be much better, they can run PIA well, otherwise any other Investor will just try to recover their money, will not be benefit for PIA...
Can PIA pls buy a380, it's good for hajj and umrah. Also please buy 787, it can fly anywhere. And also buy regional jets. Also please expand to other countries. Like Los angeles, Vancouver, Seattle. Please pia please. Thank you pia.
Smoke and mirrors. You certainly don't have to work with any consortium let alone multiple consortium's to sell off a small unprofitable airline. You just need to pick a financial adviser who has a credible record of financing/selling airlines. Ain't rocket science.
This should have happened years ago.......and yes much corruption will be involved BUT in the end the nation will benefit.
i think alot of people paid huge sum of cash for their appointment in these state-owned enterprises during the least ppp gov and privatization means that all extra un-necessary staff will have to go home and most probably most of these people will demand their cash back from politicians.
The important thing is to get rid of the political appointees from PPP days - the ratio of staff to plane is the highest in the world
the end of pakistan.
As you can see, the constant bickering over something as obvious as selling off PIA has resulted in more wastage because of getting a comm strat firm. Im no fan of PMLN but I dont blame them for doing this given how much hay has been made about the privatization of PIA, which hasnt even started!