Cabinet Committee on Privatisation endorses strike price of Rs 219 per share to sell 5 per cent shares in PPL, which is Rs 14 higher per share than the base price
In what is viewed as a political and financial victory, the federal government has offloaded its 5 per cent stake in Pakistan Petroleum Limited on a premium of Rs15.3 billion.
The government went through with the transaction despite being advised not to, due to the volatile political situation which could result in political turmoil and a financial loss.
The Cabinet Committee on Privatisation (CCOP) on Saturday endorsed the strike price of Rs219 per share to sell 5% shares in PPL, which is Rs14 higher per share than the base price, said Mohammad Zubair, Chairman Privatisation Commission while announcing the outcomes of the second capital market transaction in as many weeks after the CCOP meeting.
Despite political rallies and violent incidents that happened in Lahore, Islamabad and Peshawar, the PPL transaction was successfully completed which showed that the government was in full control of the events, said an upbeat Zubair who has two successful transactions on his credit.
About a fortnight ago, the government had sold 19.8% its stakes in United Bank Limited for Rs38 billion.
Zubair said it was the first time in the country’s history that any capital market transaction was closed on a premium, which showed that the investors have confidence over the government’s economic policies.
The government had offered 70.06 million shares at a discount price of Rs205, which was 4.2% lower than the market price. It had anticipated an earning of Rs14.3 billion.
Due to high demand, the shares were sold at Rs219, giving a premium of Rs1 billion over and above the floor price, Zubair said. On the basis of the prevailing market price of Rs213.92 per share, the government earned a premium of Rs343 million.
Zubair said the PPL’s 70 million shares were offered to international and domestic institutional investors and high net worth individuals. He said 24% of the shares were bought by the individuals, showing the increasing confidence of people on government policies.
The floor price of Rs205 per share total orders of Rs29.33 billion for 143 million shares were received, which was also the highest ever offer against any capital market transaction, Zubair said.
At the strike price of Rs219, the government received Rs16 billion orders for 73 million shares.
Zubair further added that there were two views on whether the government should carry out the transaction after recent incidents that took place in Lahore, Islamabad and Peshawar. He said that the PPL transaction was completed in a very difficult environment.
“Had the government postponed the transaction, it would have dented the image of the government and Pakistan,” said Zubair, adding that at a time when various political segments were holding rallies, a lot of positive things were also happening, such as the PPL transaction.