ISLAMABAD: The government sold its entire 42.5 percent shares in the country’s largest private-sector bank Habib Bank Limited (HBL) for $1.02 billion Saturday, the biggest so far in a series of privatization planned to help revive Pakistan’s economy.
The government approved a strike price of 168 Pakistani rupees, about $1.68, per share 609 million shares, in HBL. on Saturday, compared with the floor price of 166 rupees, or $1.66, set at the start of book-building, which began Tuesday.
Pakistan’s privatization minister Mohammad Zubair said the stake was “heavily oversubscribed,” with offers worth $1.6 billion for 955 million shares, of which $1.2 billion was offered by foreign investors.
“This is by far the largest in Pakistan’s history, the demand that we got,” Mr. Zubair said. “It’s also the largest for any Asian frontier market country.”
Of the $1.02 billion raised, the finance ministry said $764 million was foreign investment.
“The bulk of this money, $764 million dollars [from international investors], will boost foreign exchange reserves, which will stabilize the currency further, which in turn will have a positive impact on inflation,” Mr. Zubair said.
Pakistan had $16.7 billion in total liquid foreign exchange reserves as of April 3, according to the central bank.
Prime Minister Nawaz Sharif’s government has made privatization and divestitures from as many as 31 state enterprises major components of its plan to boost Pakistan’s economy, especially its foreign exchange reserves. Mr. Sharif’s government has already sold shares in United Bank, Allied Bank and energy company Pakistan Petroleum Ltd. A plan to sell a portion of the government’s stake in the Oil and Gas Development Co. Ltd., the country’s largest oil and gas business, for $800 million was abandoned in November because of poor investor demand.
The sale of the government’s Habib Bank stake is Pakistan’s largest capital market transaction in a decade, officials said. The government is currently working on the privatization of Pakistan International Airlines, Pakistan Steel Mills and several power distribution companies, finance ministry and privatization commission officials said.
Brokers and analysts said interest in the Habib Bank shares was boosted by strong participation by foreign investors.
“The response was far better than earlier expected. Nobody expected that it could cross a billion dollars,” said Mohammed Sohail, chief executive of Topline Securities, a brokerage based in Karachi, Pakistan. “Investors globally are looking at Pakistan positively, especially because of the gradual economic recovery over the last two years.”
Habib Bank has Pakistan’s largest deposit base and the most extensive network of branches. It has operations in 29 countries, according to the bank’s website. The Aga Khan Fund for Economic Development bought a 51% stake in the bank when it was privatized in 2004.
