Cabinet committee approves $1.06 billion HBL divestment

ISLAMABAD: Pakistan has approved divesting all of its state-owned shares in HBL bank for $1.06 billion, in a deal that will be the country’s largest-ever equity offering, a minister said.
“HBL privatisation is the largest ever equity offering out of Pakistan. It is also the largest ever equity offering in Asian Frontier markets,” Mohammad Zubair, Minister of State on Privatization told a news conference. “The government received $1.6 billion of offers for its 41.5 percent stakes in HBL during three days of book-building in London, New York, Singapore and Dubai.”
“Interestingly, as we were busy in those road shows, good news from the Moody’s and IMF (International Monetary Fund) regarding the country’s economy also jacked up the investors’ demand for the shares,” the minister added.
Zubair said the country has fetched $1.06 billion after offloading 609 million – 42 percent residual shares of the government in the HBL. The demand for the bank’s shares was about sixty percent more than what the government was offering. The generated demand was recorded at 979 million shares, while the government had 609 million shares to offer for sale.
Out of $1.6 billion demand received, $1.2 billion demand came from 45 foreign investors, while over 480 investors made a demand of Rs45 billion locally.
“But, out of them, $1.06 billion of demand was accepted, including foreign exchange of $764 million and 24.567 billion in Pakistani rupees,” Zubair added.
“Pakistan will be richer by around over a billion dollars due to this transaction and the bulk of money, more than 764 million dollars, is in foreign exchange.”
The current offering is the largest privatisation deal since 2006, when the then government raised $712 million from selling its stake in the Oil and Gas Development Company Limited (OGDCL).
The sale is part of the country’s plans to privatise 68 public companies, most of which are loss-making. They include two gas companies, an oil company, about 10 banks, the national airline and power distribution companies.
Earlier, the Cabinet Committee on Privatization that met with Finance Minister Ishaq Dar in chair approved strike price of Rs168/share for divestment of 609 million government of Pakistan’s residual shares in HBL, as recommended by the Privatization Commission Board.
The government had planned to offer 250 million base shares in HBL, with an option of selling 390 million more depending on the response.
AFP adds: Analyst Mohammad Sohail, chief of Topline Securities, lauded the approval of the deal, saying it would bring the much-needed foreign currency in the country.
“Of all the shares, 75 percent have been offered to foreign investors and it would bring $746 million to add to the foreign exchange reserves,” he told AFP.
HBL, formerly known as Habib Bank Limited, was partly privatised in 2003, with the Aga Khan Foundation buying the bulk of the shares. HBL, which opened in 1947, has 1,425 branches in Pakistan and an international network spread over 26 countries.