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February 15, 2019

JPMorgan, CLSA vie for $2bln Pakistan power sale


February 15, 2019

JPMorgan Chase & Co, CLSA and Credit Suisse Group AG are among foreign banks pitching for a role on Pakistan’s biggest privatisation in over a decade, which could raise around $2 billion, people with knowledge of the matter told Bloomberg.

The government’s sale of two LNG-fired power plants could draw interest from Chinese and Middle Eastern investors, one of the people said, asking not to be identified because the information is private. Pakistan received about 10 bids from groups seeking a financial advisory role and expects to pick banks by the end of March, another person said.

Citigroup Inc and Standard Chartered Plc made their own separate proposals, while Lazard Ltd is pitching with Pakistani brokerage Next Capital Ltd, the people said.

Prime Minister Imran Khan is pursuing a divestment that would rank as one of the biggest-ever mergers and acquisitions in Pakistan, as he seeks to bridge a financing gap of more than $12 billion and avoid a balance-of-payments crisis. The nation has secured loans from Saudi Arabia and the United Arab Emirates and is close to a loan agreement with the International Monetary Fund (IMF).

“The sale will bring in much-needed foreign currency into the country, complementing foreign government loans and a likely IMF bailout package,” said Arif Rafiq, an analyst at the Washington-based Middle East Institute.

Pakistan is selling National Power Parks Management Co, the state-owned firm that owns and runs the 1,230 megawatt Haveli Bahadur Shah plant and the 1,223MW Balloki plant. Both plants are located in Punjab province, Pakistan’s most populated, and started operations in the past two years. The government has said it aims to complete the privatisation of the power assets in the financial year ending June 30.

The sale would rank as Pakistan’s largest privatisation since 2006, when Emirates Telecommunications Group Co bought a $2.6 billion stake in Pakistan Telecommunication Co in the country’s biggest-ever M&A transaction, data compiled by Bloomberg show. The power plant divestment is set to become Pakistan’s largest privatisation in the energy sector, according to government figures dating back to 1991.

Pak Brunei Investment Co is also pitching for a role on the power plant divestments in a group with Zeeruk International Pvt, the people said. BMA Capital Management Ltd and CPCS Transcom Ltd have submitted a joint proposal, according to Salman Virani, head of investment banking at BMA Capital.

Habib Bank Ltd and China International Capital Corp are partnering with JPMorgan, a representative for Habib Bank said in response to Bloomberg queries. CLSA submitted a joint proposal with Bank Alfalah Ltd and their local brokerage venture Alfalah Securities Pvt, while Credit Suisse is pitching together with Pakistan’s Elixir Securities Ltd, the people said.

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