Chinese investors keen to acquire troubled Pakistani businesses

KARACHI: Chinese investors are keen to snap up deals with the troubled businesses in Pakistan and a number of them are already negotiating with some banks and a cement company for the equity partnership, a top businessman said on Tuesday.

Arif Habib, chairman of Arif Habib group said private business groups in China are expanding their exposures to businesses in the country. “They are already negotiating with banks facing difficulties in meeting their minimum capital requirements,” he said.

Without naming the banks, Habib said there is a couple of banks facing difficulties, and they all are in negotiations with the Chinese investors.

He said in the pretext of China-Pakistan Economic Corridor (CPEC), cement demand will surge. He said the existing production is not enough. 

“Several manufacturers have already announced expansion plans,” he added.

“Dewan Cement is out of resources and negotiating with Chinese businesses for equity investment.”

The leading broker said cement manufacturers and steel makers need to expand to remain going-concerns or they will be pushed out of the market.

Pakistan Stock Exchange Ltd has already received interest from international companies, including the Shanghai Stock Exchange to buy a stake in the bourse.

The Pakistani bourse is searching for a strategic investor, and in July it invited companies to show interest in buying up to 40 percent of its stakes.

Sources said the Chinese bourse has already made an unofficial bid of Rs25/share for around 800 million shares of the PSX, put on sale.

Moreover, China state-owned Shanghai Electric has also expressed interest in acquiring K-Electric Limited. 

On the development, Habib said it would be better. The existing sponsor – Abraaj Group – is an equity group, while Shanghai Electric is itself an operator.

A corporate lawyer said Chinese business groups are expanding around the world.

“It is an opportunity for Pakistani companies for expansion and technology transfer,” said the lawyer.

China has a special interest in Pakistan because of the $46 billion-CPEC projects, which appear to be a very crucial for both the countries. 

To China, CPEC provides an alternate secure route to import energy and find new markets for its goods and services, while it helps Pakistan counter Indian influence in the region, position itself as a major transit point connecting Eurasian region with South Asia and South East Asia and provide a much-needed base to spur the economic growth.