x Abu Dhabi, UAEMonday 22 January 2018

Pakistan offers to sell its stakes in nine companies

In an effort to reduce debt, Pakistan's government is seeking to divest itself of various holdings.

DUBAI // The Pakistan government is offering investors in the Emirates its stakes in nine corporations, including the country's largest lender and its biggest oil and gas exploration firm, as it seeks to reduce debt. Officials from Pakistan's privatisation commission along with JP Morgan, the lead manager on the project, recently concluded a series of presentations to investment houses including the Abu Dhabi Investment Authority, one the largest sovereign wealth funds in the world, as well as Emirates Investment Authority, Abu Dhabi Investment Corporation and Invest AD.

"Eventually the government will sell all its shareholding," said Waqar Ahmed Khan, the privatisation minister. "We are doing the number crunching, developing baseline formulas and doing evaluations for a number of projects." The holdings in the first batch of companies are expected to be sold within the first half of next year, he said. The government may sell its holdings in firms including the National Bank of Pakistan, which has assets of more than US$10 billion (Dh36.73bn).

Oil and Gas Development Corporation and Pakistan Petroleum, two oil and gas exploration companies, the energy firms Faisalabad Electricity, Kot Addu Power and Jamshoro Power, Pakistan Post Office and State Life Corporation of Pakistan, the country's biggest life insurer, are also on offer. The government is also offering its remaining 42 per cent stake in Habib Bank. The Agha Khan Fund for Economic Development owns the majority stake in Pakistan's largest private commercial bank.

"Investors from the UAE are particularly interested in electricity distribution and the banking sector," said a senior official who attended the presentations. "Investment houses are evaluating different projects and we expect to hear their decision some time early next year." Pakistan's government plans to use 90 per cent of the privatisation proceeds to service its foreign debt of more than $50bn. It will use the rest for poverty alleviation, according to its presentation.

The last two years have been tough for Pakistan, which twice had to approach the IMF for loans of more than $11bn. It has received $6.34bn so far. Pakistan also sought financial help from a group of friendly countries this year and approached both the World Bank and the Asian Development Bank to meet its growing balance of payments deficit and to stabilise its depleted foreign currency reserves. "Our analysis shows government shareholdings are worth in excess of $100bn," Mr Khan said. "This amount can be raised and used in a variety of ways with the right approach to privatisation process and deal making."

Pakistan has raised $9bn through 167 privatisation transactions across sectors, its presentation said. The privatisation commission has completed a transaction worth $2.6bn through the sale of the government's 26 per cent stake in Pakistan Telecommunication Company (PTCL) to Etisalat. The government may sell another 25 per cent of PTCL, the nation's largest telecoms company. The government has also managed to sell stakes worth more than $2bn in the banking and finance sector, including offloading its 30.3 per cent stake in United Bank to Abu Dhabi Group, one of the emirate's investment houses.

"These are not small corporations we are selling," said Mr Khan. "We are talking about institutions." @Email:skhan@thenational.ae