It would give boost to the privatization process and increase the private sector role in the financial sector



Mar 31 - Apr 06, 2003



Pakistan Industrial Credit and Investment Corporation (PICIC) has offered the highest (over Rs.786 million) bid for the management rights of the Investment Corporation of Pakistan State Enterprise Mutual Fund (ICP SEMF).

The bids were opened in Islamabad at the bid-opening ceremony arranged by the Privatization Commission, under the Chairmanship of Prime Minister's Advisor on Privatization and Investment, Dr. Abdul Hafeez Sheikh.

The four interested parties who have deposited their earnest money for participation in the bidding for ICP SEMF included ABAMCO Limited, Arif Habib Investment Management Limited, Consortium of Pakistan Kuwait Investment Company Pvt. Ltd, Al-Meezan Investment Management Limited and Pakistan Industrial Credit & Investment Corporation Ltd (PICIC) dropped their bids in a transparent bid box, which were opened by the representatives of the print and electronic media.

According to a PC announcement, the bids received were respectively ABAMCO Limited (Rs.650m), Arif Habib Investment Management Limited (Rs.610m), Consortium of Pakistan Kuwait Investment Company Pvt. Ltd Al-Meezan Investment Management Limited (Rs.475m) and Pakistan Industrial Credit and Investment Corporation Ltd (Rs.786.786 million).

The lowest bid from the consortium of Pakistan Kuwait Investment Company Pvt Ltd Meezan Investment Management Ltd was dropped from the second round, however, the rest of the three highest bidders were asked to rise their bids with a multiple of 2.5 million. Having no response from any party PICIC was declared as the highest bidder.

The highest bid will now be considered after a clearance from the SECP in the newly constituted PC Board to formulate their recommendations for approval of the Cabinet Committee on Privatization (CCoP). The PC Board is expected to meet in the first week of April 2003.

Addressing the bid opening ceremony Dr. Hafeez Sheikh, who is also Chairman of the Privatization Commission, said that the government was committed to the privatization process and acceleration would be witnessed in this regard in the coming days. He expressed the hope that bidding would set a motion for the upcoming big tricket transactions.



Senator Sheikh told newsmen that Rs.3.9 billion proceeds have been realized from the sale of the remaining shares of the MCB, the DG Khan Cement, the Attock Refinery Ltd (ARL) and the Pakistan Oilfields (POL) through stock market, out of which Rs.2.9 billion were received by the present government. Having encouraging response and with an objective to deepen and broaden the stock market the government was considering to divest shares of the National Bank of Pakistan (NBP), the Pakistan Telecommunication Company Limited (PTCL), the Sui Southern Gas Company (SSGC), the Pakistan International Airlines Co. (PIAC), the Oil and Gas Development Company Limited (OGDCL) and other entities through stock market besides the efforts undertaken for the strategic sale of some of the mega entities such as the Habib Bank Limited (HBL), the PTCL, the Karachi Electric Supply Corporation (KESC), the OGDCL, etc. he added.

Later talking to reporters, the advisor said that the government intended to bring efficiency to private sector through privatization of public sector entities, which would reduce the cost of business. Terming the ICP SEMF a major transaction, he hoped that it would give boost to the privatization process and increase the private sector role in the financial sector. The National Investment Trust Limited (NITL) transaction would be taken up soon after the bidding of the PSO, targeted on April 26, 2003, he said.

The ICP SEMF have shown tremendous growth in its income during the last year. It paid a cash dividend of 26 per cent in fiscal year 2002. The ICP SEMF which has a paid up capital of Rs.840 million was offered for privatization in a unique way first example of its kind in Pakistan. The market did not have the experience of such a unique process in which there was sale of management rights. There will be no transfer of the company to the successful bidder. An analyst explained that under the new process, the shareholders were likely to get profits and capital gains on the sale of blue-chip stocks. "Any good amount which is over and above the present market price accounted for capital gains may be distributed among the funds certificate holders", he added.

Market analysts have described ICP SEMF privatisation as a highly commendable excercise of the Privatization Commission (PC) in the current uncertain macro environment. One expert commented "the ICP SEMF privatization is another feather in PC's and the successful bidding is a great news in the current economic conditions". This transaction has a significant message for the PC where it should try to focus on those transactions, which can be divested locally, commented another adding that the cash money environment locally likely to be of great help to all the local investors where they can generate economic values owing to their cheaper cost of funding.