Role of Privatisation Commission &
Achievements during Present Government
December 2015
Objectives of Privatisation
• Enhance service delivery to the people of Pakistan
• Strengthen Pakistan’s fiscal position
• Attract private capital, technology and management
• Deepen Pakistan’s capital markets
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Establishment of
Privatisation Commission
• Privatisation as an important economic reform policy tool,
for generating growth and to expunge structural
inefficiencies, by removing false barriers and opening up
the economy to competition
• Privatisation Commission was established as a Body
Corporate under the provisions of Section 3(1) of the
Privatisation Commission Ordinance, 2000
• The Privatisation Commission, under the PC Ordinance, is
entrusted with the statutory mandate of implementing the
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Privatisation Policy of the Federal Government
Board of Privatisation Commission
• 14 members of the Board belong to the corporate
sector, and are amongst the best known corporate
leaders of Pakistan
• Chairman is Mr. Mohammad Zubair, who has
worked with IBM as CFO in Europe, MENA region
and Pakistan for 28 years
• Secretary is a career civil servant with 31 years of
service, and is in the rank of Secretary to the
government
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Modes of Privatisation
Strategic Sale / Public-Private Partnership
• Complete or partial sale of assets and business with
transfer of management control
• Lease, Management or Concessions contracts
• Management or employee buyouts
Capital Markets
• Sale of shares through public auction or tender
• Public offering of shares through a stock exchange
• Global Depositary Receipts (GDRs)
• Exchangeable / Convertible bonds
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Privatisation Process
1. Approval of Council of Common Interest (CCI) / Cabinet
Committee on Privatisation (CCoP)
2. Hiring of Financial Advisor (FA) or Valuator
3. Due diligence by FA and Privatisation Commission (PC)
4. Finalization of Transaction Structure
5. Restructuring and regulatory reforms, if needed
6. Invitation of Expressions of Interest (EOI) from potential
bidders
7. Submission of Statement of Qualifications (SOQs)
8. Pre-qualification of firms
9. Due diligence by potential buyers
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(cont'd…)
Privatisation Process
10. Sharing of Bid Documents / Instructions with pre-qualified
bidders
11. Pre-Bid Conference
12. Approval of Valuation (Reference Price) by PC Board &
CCOP
13. Bidding process (media invited to observe bidding)
14. Approval of bidding results by PC Board and CCOP
15. Issuance of Letter of Intent to successful bidder
16. Finalization of Sale Agreement between PC and Buyer
17. Handing over of the entity after receipt of full payment
(…cont'd)
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How Transparency is Ensured
• Process of check & balance and controls is in place
• Every transaction goes through various forums such as:
 Evaluation Committee
 Transaction Committee
 Board of the Privatisation Commission
 Cabinet Committee on Privatisation (CCOP)
• Other forums taken on board at various stages, including submission of documents:
 National Accountability Bureau (NAB)
 Public Procurement Regulatory Authority (PPRA)
 Competition Commission of Pakistan (CCP)
 Public Accounts Committee / Standing Committees on Finance, Revenue,
Economic Affairs, Statistics & Privatisation of the Senate and National Assembly
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Pakistan’s Past Experience
with Privatisation
• Pakistan was one of the first countries in the region to start
the privatisation process
• There have been some important privatisation successes in
the industrial, telecom and financial sectors, since the start
of this process in the early 1990s
• The telecom and banking sectors in particular have become
major contributors to the national exchequer
• Between 1991 and 2013, proceeds of Rs. 476 billion (over
$9 bn) were raised from 167 privatisation transactions
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Privatisation Program Current Snapshot
Description
Total
Total entities under the CCOP-approved Privatisation Program
69
Total entities approved by CCOP for Early Implementation
39
No. of Transactions already initiated during Present Government
25
No. of Transactions completed so far
(UBL, PPL, ABL, HBL, NPCC)
5
No. of Transactions run but not completed so far
(OGDCL, HEC)
2
Proceeds raised so far during Present Government
No. of Ongoing Transactions
(PSM, PIAC, FESCO, IESCO, LESCO, GEPCO, QESCO, PESCO, MEPCO,
HESCO, SEPCO, KAPCO, NPGCL, JPCL, LPGCL, CPGCL, SLIC, SME Bank)
$1.715 bn
($1.124 bn in
FX)
18
10
CCOP Approved Privatisation Program
(cont'd…)
11
CCOP Approved Privatisation Program
(…cont'd…)
12
CCOP Approved Privatisation Program
(…cont'd…)
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CCOP Approved Privatisation Program
* Cotton Export Corporation of Pakistan and Rice Export Corporation of Pakistan were part of the CCI-approved
list of 69 entities, however, both entities have merged into the Trading Corporation of Pakistan (TCP)
(…cont'd)
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Transactions Completed So Far
Raised gross proceeds of Rs. 172.9 billion so far, including over $1.1 billion in
FX, from 5 completed transactions:
• UBL Offering (June 2014) – Rs. 38.2 billion, including $315 million in FX
 First transaction after gap of 7 years. Only 7% discount, lower than
average in comparable markets in the Asia-Pacific region (~12%)
• PPL Offering (June 2014) – Rs. 15.4 billion
 First ever transaction to fetch a premium on sale of any Pakistani scrip
• ABL Offering (December 2014) – Rs. 14.4 billion, including $20 million in FX
 Only 2.5% discount, beating Asia Region precedent benchmarks
• HBL Offering (April 2015) – Rs. 102.4 billion, including $764 million in FX
 Largest ever equity offering in Pakistan and any Asian Frontier Market
• NPCC Strategic Sale (August 2015) – Rs. 2.5 billion, all in FX of $25 million
 Sold after 4 unsuccessful attempts in previous governments. First
strategic sale since 2008
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International Recognition For
Privatisation Transactions
PC has received international recognition for privatisation transactions
in the form of the following awards in 2014 & 2015:
• Award of ‘Issuer of the Year’ in 2014 given to Pakistan by IFR Asia
• UBL transaction given ‘Best Deal Award’ for Pakistan in 2014 by The
Asset, one of Asia’s most prestigious corporate ranking journals
• HBL transaction given ‘Deal of the year’ award for Pakistan in 2015
by The Asset
• ABL transaction given ‘Deal of the year – highly commended’ award
for Pakistan in 2015 by The Asset
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Thank You
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