The Hong Kong & Shanghai Banking Corporation (HKSB) and the local brokerage house Taurus Securities have been appointed as financial advisers to help launch the Pakistan Privatisation Fund, the privatisation commission says.
The fund is designed to divest a number of government-owned unlisted and listed companies by offering a basket of minority shares to local and international investors, a commission statement said. The short term aim is to raise much needed cash. In the long term, the fund will be an instrument to help develop local capital markets. It will also allow local investors to participate and benefit from the government’s privatisation programme.
It will be a mutual fund with a value in excess of $200 million, a commission source says. The basket will be made up of about 30-35 companies which will be shortlisted by the consultants.
These could potentially include shares from the following: Pakistan Telecommunications Corporation (PTC), the two gas companies Sui Southern Gas Company and Sui Northern Gas Pipelines, fertiliser plants such as Pakistan Arab Fertilisers and Pakistan Saudi Fertilisers Corporation, engineering firms, and electricity projects and companies such as Kot Addu, Jamshoro, Faisalabad and possibly Karachi Electric Supply Corporation (KESC).
The proportion of government shareholdings offered to the fund has still to be decided, but it is likely to be modest – between 5 and 15 per cent. This contribution will be in addition to other privatisation plans for these companies. PTC, is already being privatised by the sale of a 26 per cent strategic stake and management control.
The commission wants the fund to start within four or five months. A decision will be taken on the launch details in September.
Industry sources foresee a more modest beginning for the fund. They say the size will be between $100 million-200 million, and they expect it to concentrate on between 20-30, mostly unlisted companies, rather than the major corporations which are already actively traded on the stock exchange.