ISLAMABAD: The government will rake in over $1 billion by selling its 609-million-share stake in Habib Bank Ltd (HBL), a deal that would surpass the equity capital market transactions of OGDCL ($813m) and PTCL ($898m).
The Cabinet Committee on Privatisation (CCoP) in its meeting on Saturday approved the strike price of Rs168 per share for the sale as recommended by the Privatisation Commission.
Speaking at a news conference after the meeting, Privatisation Commission Chairman Mohammad Zubair said the transaction received “tremendous” response from both foreign and domestic markets, and it was Pakistan’s largest-ever equity offering which fetched demand of $1.6bn.
This included a record foreign demand of $1.2bn with over 45 investors participating, he said. Moreover, the unprecedented domestic demand of Rs45bn (around $450m) with over 480 investors’ participation “shows the transaction was oversubscribed”.
The government accepted $1.02bn of bids, including a foreign exchange component of $764m, he said.
The HBL’s capital market transaction would help boost country’s foreign exchange reserves, stabilise economy, reduce inflation, strengthen currency, besides bringing positive impact to discount rate and reducing the cost of borrowing, Zubair said.
The government has already sold off its shares in the Allied Bank Ltd (ABL) and the United bank Ltd (UBL). The UBL, at the time of its incorporation in August 1941, had a paid-up capital of Rs2.5m. As of December 2014, the bank was the largest bank in Pakistan in terms of total assets amounting to Rs1.86 trillion.
The HBL has recently entered into an agreement with Barclays Bank to acquire its business and operations in Pakistan by way of amalgamation.
Zubair said the participation of Lazard, the US-based world’s leading financial advisory and asset management firm, and the Sindh Pension Fund “speaks volumes of the confidence that the international financial institutions have in Pakistan’s economic standing”.
As for OGDCL’s privatisation, he said the government was waiting for the international oil prices to stabilise before taking up the issue.
From the next week, the Privatisation Commission is launching roadshows for the National Power Construction Company (NPCC), whose sell-off is expected to be completed by May this year, he said.