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Business Recorder
09-07-2025
- Business
- Business Recorder
Privatisation agenda makes progress
ISLAMABAD: In a significant advancement of the government's privatisation agenda, two major decisions were taken Tuesday by the Privatisation Commission Board and the Cabinet Committee on Privatisation (CCoP), marking steady progress in key strategic transactions. 1- Prequalification of Investors for Pakistan International Airlines (PIA): The Privatisation Commission (PC) Board, in its 237th meeting held under the chairmanship of Adviser to the Prime Minister on Privatisation and Chairman, Privatisation Commission, Muhammad Ali, approved the prequalification of four interested parties for the divestment of Pakistan International Airlines Corporation Limited (PIACL). The Board reviewed the recommendations of the Prequalification 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). Following a thorough scrutiny, the following four Interested Parties have been pre-qualified: PIA privatisation: EoIs due today for up to 100% stake Consortium comprising Lucky Cement Limited, Hub Power Holdings Limited, Kohat Cement Company Limited, and Metro Ventures (Private) Limited. Consortium comprising Arif Habib Corporation Limited, Fatima Fertilizer Company Limited, City Schools (Private) Limited, and Lake City Holdings (Private) Limited Fauji Fertilizer Company Limited Air Blue (Private) Limited The pre-qualified parties will now proceed to the buy-side due diligence phase - a critical next step in the transparent and competitive privatisation process of PIACL. 2- Roosevelt Hotel Transaction Structure Approved: In another major development, the Cabinet Committee on Privatisation (CCoP) today approved the transaction structure for the Roosevelt Hotel, New York, as proposed by the Privatisation Commission Board.
Express Tribune
08-07-2025
- Business
- Express Tribune
Cement makers in race to buy PIA
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 Listen to article 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.
Express Tribune
24-04-2025
- Business
- Express Tribune
Govt tightens PIA bidding terms
Listen to article The government on Thursday tightened conditions for prospective buyers of Pakistan International Airlines (PIA) to attract only financially sound parties for the second privatisation bid and also barred provincial governments from participating in the bidding. The prospective bidders can show their interest in acquiring majority shares in PIA till June 3, said Muhammad Ali, Adviser to Prime Minister on Privatisation, while talking to journalists. He said that the government tightened the conditions by learning lessons from the last failed privatisation attempt. It also facilitated investors by allowing them to change the lead consortium member two weeks before the bidding date. The adviser shared details of the revised Expression of Interest (EOI) for selling 51% to 100% PIA shares along with management control. It hopes to strike a deal by the last quarter of this calendar year. The government has set the June 3 deadline for submitting documents by prospective buyers excluding the federal and provincial governments and their entities. However, the affiliates of federal and provincial governments that do not fall in the category of state-owned enterprises like the Fauji Foundation are eligible to participate in the bidding, said Privatisation Commission Secretary Usman Bajwa while responding to a question. Fauji Foundation's name is in circulation as one of the potential consortiums to bid for acquiring PIA. Muhammad Ali said that the government had allowed the replacement of lead consortium members at least 15 days prior to bidding, subject to compliance with the pre-qualification criteria and the Request for Statement of Qualification instructions. Usman Bajwa said that the minimum worth of the lead consortium member should be Rs8 billion and it would have to go through all the checks before being declared eligible to participate in the bid. The privatisation adviser said that the change in the lead consortium member would not affect the price as all those changes had to be approved and vetted much before the bidding date. The government attempted to privatise PIA last year but ended up with the sole bidder that too a real estate developer, which offered Rs10 billion against the minimum price of Rs85.03 billion. This raised questions about the qualification criteria. The government has exempted 18% GST on the purchase or lease of aircraft for PIA and the negative equity can also be adjusted in light of the feedback to be received from the parties, said Ali. The reference price would be better than the last price of Rs85.03 billion due to the improvement in balance sheet of the airline, opening of European routes and settlement of 18% GST, said the privatisation adviser. To a question, the Privatisation Commission secretary said that according to the approved accounts, the assets and liabilities' position of PIA was more or less the same. He said that the overall balance sheet of the airline had improved because of booking the deferred tax credit of Rs30 billion this year, which was also a reason for showing profits. "One of the factors of PIA profitability is the adjustment of past tax credits at the current value of Rs30 billion," said the privatisation secretary. PIA has started breathing but it still needs money to grow and expand the 15 operational aircraft fleet, said Usman Bajwa. The adviser clarified that no foreign government was interested in buying PIA at this stage and the government would conduct the international competitive bidding. Ali said that financial soundness conditions had been made stringent to make sure that only financially credible companies come forward. The prospective buyer could be a scheduled airline. In case of non-airline business bids for PIA, such enterprise must have a minimum annual revenue of Rs200 billion, or $715 million, as per the audited financials of December 2023 or later. The minimum annual revenue of Rs100 billion, or $360 million, for each year during the last three years is also required, said the adviser. Ali said that there was a new insertion in the financial criteria for qualification related to liquidity and cash in hand. The party must have Rs28 billion, or $100 million, in cash or liquid assets, said the adviser. According to another improved condition, the prospective buyer must be audited by an international renowned firm of chartered accountants or category 'A' or 'B' list of auditors as per SBP's panel of auditors.
