Pakistan to raise $387 million in United Bank sale

[Devil Soul]

Pakistan to raise $387 million in United Bank sale
By Reuters
Published: June 12, 2014

ISLAMABAD: The government has sold its 19.8 pct stake in United Bank Ltd for $387 million, the country’s first capital market transaction in eight years.

The deal is part of the government’s initiative to privatise 68 public companies, including 10 banks, that was announced earlier this year.

The government sees the sell-off as a life saver for the country’s struggling economy, crippled by power shortages, corruption and militant violence.

Successful privatisation is Prime Minister Nawaz Sharif’s top political and economic goal. “The first transaction under the privatisation commission has been overwhelmingly successful and with it Pakistan has re-entered the world equity market after eight long years,” Privatisation Commission Chairman Mohammad Zubair told Reuters.

Foreign buyers including Morgan Stanley, Wellington, Templeton and others bought 82 percent of the stake, he said. Pakistan hopes to raise up to $5 billion in privatization revenue in the next two years to ease pressure on strained public finances, Zubair added.

Observers fear that an assault on Sunday on Jinnah International Airport in Karachi, Pakistan’s sprawling commercial hub of 18 million, would hamper efforts to attract foreign investors to revive economic growth.

“This active participation in United Bank’s privatisation by the world’s leading equity funds is a reflection of Pakistan’s extremely positive economic situation as perceived by these investors despite Sunday night’s terror attacks in Karachi,” Zubair said.

The International Monetary Fund saved Pakistan from possible default by agreeing last September to lend it $6.7 billion over three years, making the loan conditional on economic reforms such as a longstanding promise to privatise loss-making state companies.

 

[Pandora]

Clearly tells us how govt plans to achieve 5% target next year but they need to work on increasing exports as this is just a stop gap solution.

 

[Hyde]

Right, it was initially estimated that we would sell the 20% shares for around 250 million dollars, I see either the initial estimate was incorrect or the bidding is going better than expected

Interesting read on WSJ Pakistan’s United Bank Sale Generates ‘Phenomenal’ Response - Frontier Markets News - Emerging & Growth Markets - WSJ

 

[farhan_9909]

So what is the latest status of reserve?
are they still in 13Billion$ mark? because if i correctly remember,dar sahab claimed that reserve's will cross $15Billion mark in july

 

[Hyde]

Clearly tells us how govt plans to achieve 5% target next year but they need to work on increasing exports as this is just a stop gap solution.

Actually if you see the state owned companies were incurring losses of about 500 billion rupees per year... That was also true when Rupee was around 60 rupees (so 5-8 billion dollars per year), That's about 20-25 billion dollars of burden upon the government's shoulder for 5 years only. Good enough amount to have started parralel and clean companies for the same investment.

Imagine if we had got ridden of this state burden in 2008/09, that's 20 billion dollars of burden relieved off from the Government's shoulder if not generating profit. Privatisation is good idea for Pakistan but not sure about the transparency of privatisation.

The best part of privitasation is, the government is getting money from taxes of employees at least even if the company is not generating profit for its righful private owners so may be these IMF loans would not have needed if he played smartly.

 

[Shabaz Sharif]

So what is the latest status of reserve?
are they still in 13Billion$ mark? because if i correctly remember,dar sahab claimed that reserve's will cross $15Billion mark in july

Did Pakistan receive $600 million from 3g auction?

 

[Pandora]

Actually if you see the state owned companies were incurring losses of about 500 billion rupees per year... That was also true when Rupee was around 60 rupees (so 5-8 billion dollars per year), That's about 20-25 billion dollars of burden upon the government's shoulder for 5 years only. Good enough amount to have started parralel and clean companies for the same investment.

Imagine if we had got ridden of this state burden in 2008/09, that's 20 billion dollars of burden relieved off from the Government's shoulder if not generating profit. Privatisation is good idea for Pakistan but not sure about the transparency of privatisation.

The best part of privitasation is, the government is getting money from taxes of employees at least even if the company is not generating profit for its righful private owners so may be these IMF loans would not have needed if he played smartly.

2008/09 was the year when Dajjal descended upon pakistan and became its president. Pakistans Economy has been cursed ever since.
Privatisation is the way to go but as private sector expands pakistan also need a body to keep private companies in check. This wont be the last IMF loan we will be taking as even after our economy recovers government will still be getting loans to spend on development projects. All the developed countries take loans but they make profitable investments with that loan.