PSX to facilitate raising funds for Gwadar free trade zone firms

KARACHI: Pakistan Stock Exchange (PSX) on Monday signed an agreement with the Chinese operator of Gwadar port to facilitate companies in the city’s free trade zone in raising funds from the capital market.

Prime Minister Shahid Khaqan Abbasi along with other Chinese and Pakistani government officials witnessed the signing ceremony of a memorandum of understanding (MoU) between PSX and China Overseas Ports Holding Company Pakistan (Pvt.) Limited (COPHC) in the port city.

“The primary purpose of MoU is that PSX will make its best endeavour to help and facilitate the investors/businesses/companies in the Gwadar free trade zone so that they can raise funds from the exchange,” PSX said in a statement.

“The COPHC will extend help to PSX in conducting due diligence on the investors/businesses in Gwadar free zone applying to PSX for listing of equity and debt securities.”

PSX and the Chinese company agreed to cooperate for listing of equity and debt securities at PSX in response to strategic national priorities of the Chinese and Pakistan’s governments with respect to ‘One Belt-One Road’ initiative in general and China-Pakistan Economic Corridor (CPEC) initiative in particular.

The government planned to list power firms under CPEC on the stock exchange to enable ownership of the multi-billion dollar projects by public as well as help the bourse grow further.

Chinese-led consortium had bought 40 percent strategic stake (320 million shares) of the PSX at a price of Rs28/share at around $85 million.

Traders believed that the government could utilise capital market to raise funds through issuing infrastructure bonds and equity offerings.

CPEC initiative envisaged more than $50 billion investment in major infrastructure projects in the country over a 10- year period. Of that, energy projects are estimated at $38 billion.

Pakistan has already handed over Gwadar port’s operation to Chinese state-owned COPHC on 40-year lease. China is expected to receive 91 percent of revenues until the port is returned to Pakistan. The port operator is also exempted from key taxes for more than 20 years.

Since 2014, Beijing has committed more than $800 million in grants and concessional loans for Gwadar.

An estimate said around 30 companies have already invested around $475 million in hospitality, banking, fish processing and logistics sector in the free trade zone in the city.

COPHS is an emerging and fast developing Chinese based multinational organisation which provides marine services, container terminal arrangement and maintenance of port facility services. The port operator aims to develop one of the most strategically located port of Gwadar into an economic hub of Pakistan, and to cater for all types of international commercial activities generated from one business to another irrespective of quantity, quantum and magnitude.