Cement makers in race to buy PIA

Express Tribune

08-07-2025

PIA's bidding is expected to take place in the last quarter (October-December) of the current calendar year, said Muhammad Ali, Adviser to the Prime Minister on Privatisation. photo: file
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The Privatisation Commission board on Tuesday declared four local parties, including three associated with cement business, eligible for bidding for the acquisition of Pakistan International Airlines (PIA), inching a step closer to the sale of the loss-making entity.
In a related development, the Cabinet Committee on Privatisation (CCOP) approved the transaction structure for the disposal of Roosevelt Hotel, New York, which is owned by PIA. The committee picked the option of running the hotel as a joint venture, which had been suggested by the financial adviser a year ago but was ignored by the government. Deputy Prime Minister Ishaq Dar chaired the CCOP meeting.
The Privatisation Commission board met under the chairmanship of Adviser to the Prime Minister on Privatisation Muhammad Ali. It approved the pre-qualification of four interested parties for the divestment of Pakistan International Airlines Corporation Limited (PIACL), according to a press statement.
The board reviewed recommendations of the pre-qualification committee based on the evaluation of Statements of Qualification (SOQs) submitted by five prospective investors, in line with technical, financial and documentary requirements, defined in the Request for Statement of Qualification (RSOQ). The board declared a consortium comprising Lucky Cement, Hub Power Holdings, Kohat Cement and Metro Ventures fit for bidding for PIA.
The second consortium comprised Arif Habib Corporation, Fatima Fertiliser Company, City Schools (Private) Limited and Lake City Holdings (Private) Limited. The board also declared Fauji Fertiliser Company fit for bidding for PIA, accepting the entity as a private limited company. It is owned by the Fauji Foundation. Airblue (Private) Limited was the only entity that had been declared fit for bidding and was running an airline business.
The Privatisation Commission said that the pre-qualified parties would now proceed to the buy-side due diligence phase – a critical step in the transparent and competitive privatisation process. A consortium of Augment Securities & Investments, Serene Air, Bahria Foundation, Mega C&S Holding and Equitas Capital LLC could not qualify for bidding.
The government wants to sell majority shares in PIA along with management control. During the last attempt, the government had set the minimum price at Rs85.03 billion with a Rs45 billion negative balance sheet. Now, the government has taken out more debt from the balance sheet, which should positively impact the minimum price.
PIA's bidding is expected to take place in the last quarter (October-December) of the current calendar year, said Muhammad Ali, Adviser to the Prime Minister on Privatisation.
The Privatisation Commission had invited Expressions of Interest (EOIs) for divestment of 51-100% share capital of PIACL together with management control. It is the second attempt to privatise the airline after the first bid failed last year. The commission said that the CCOP on Tuesday approved the transaction structure for Roosevelt Hotel, New York, as proposed by the Privatisation Commission board.
Out of the three options evaluated by the financial adviser – outright sale, joint venture with multiple options and long-term lease – the joint venture model with multiple options has been approved by the CCOP, according to the announcement. This option is aimed at maximising long-term value for the country, while ensuring flexibility, multiple exit opportunities and minimising future fiscal exposure, it added.
These decisions reflect the government's strong commitment to advancing its economic reform and privatisation agenda in a transparent, market-driven and investor-friendly manner, said the commission.
Pakistan hired Jones Lang LaSalle Americas as the financial adviser with a fee of Rs2.2 billion. According to its report on the transaction structure, Pakistan will not need to pay any additional money for a joint venture, as its contribution will come in the form of the hotel's land value. "Based on pre-marketing, due diligence and analysis of the options, the joint venture structure nets the highest value for the government of Pakistan," the adviser stated in its report.
In the joint venture scenario, the government will contribute the entire land value to a joint venture partner. The land value will be calculated based on its full potential, including the 32-storey building. A contribution agreement will be signed immediately, with the joint venture agreement to follow in 2027.
The development partner will make two initial deposits. "This option has the highest risk with the highest net proceeds to Pakistan," the adviser remarked in the report submitted last year.