Govt to offer 7.5pc OGDCL shares on Oct 2

The Privatisation Commission of Pakistan (PCP) Tuesday declared to have planned to launch over 322.460 million or 7.5 per cent of its shares in the Oil and Gas Development Company Limited (OGDCL) by the second of next month.

The secondary offering of its ordinary shares and Global Depository Shares (GDSs) in the oil giant would fetch the resource-constrained federal government at least Rs 83.891 billion or $ 816 million.

This estimate is based upon the closing share price of OGDCL shares on September 22. The offer consists of an international institutional offering (the “International Institutional Offer”), in the form of shares and GDSs, to international institutional investors, including Qualified Institutional Buyers in the United States, as defined in and in reliance on Rule 144A of the US Securities Act of 1993, as amended (Securities Act); and outside the US, to certain persons in offshore transactions under Regulations of the Securities Act, a domestic institutional offering (the Domestic Institutional Offer) of shares to institutional and high net worth individual investors; and a domestic public offering (Domestic Public Offer) of shares to the general public, including a portion reserved for OGDCL employees.

The shares are listed and traded on the country’s three stock exchanges in Karachi, Lahore and Islamabad under the symbol OGDC. The GDSs are listed on the London Stock Exchange with each GDS representing 10 shares under the symbol OGDC. The price for the shares and GDSs offered in the International Institutional Offer would be fixed following a book-building process, with the price and allocations for the shares and GDSs announced on or around October 16.

The first day of unconditional trading for the GDSs on the London Stock Exchange is expected to occur on or around Oct 21.

The domestic institutional offer will occur concurrent to the International Institutional Offer. However, the domestic public offer would take place after the closing of the international institutional offer at a price guided by the final international institutional offer price, or at a discount to be approved by the cabinet committee on privatisation.

All of the net proceeds from the offer would be received by the federal government. Citigroup Global Markets Limited (Citi) and Merrill Lynch International (BofAML) are Joint Global Coordinators and International Bookrunners, and KASB Bank Limited (in conjunction with KASB Securities Limited) are domestic lead manager and book-runner on the transaction.

The government of Pakistan and OGDCL would be subject to a lock-up period of 180 days, subject to waiver by BofAML, Citi and KASB. While launching the transaction, Mohammad Zubair, Minister of State for Privatisation, said: “We believe the investment case for OGDCL is compelling. It is a high quality asset that boasts a long track record of out-performance and delivery of shareholder value.

“OGDCL is the third divestment that Pakistan has brought to market this year, following the successful offers of PPL and UBL, which were both well received by investors. The support for Pakistan’s on-going privatisation programme is a vote of confidence in the country’s growing economy. Just last month, the International Monetary Fund raised its GDP growth estimates for Pakistan to 4.3 per cent for fiscal year 2015.

“The growth in the Pakistan economy is underpinned by a young and dynamic population that is powering the success of companies like OGDCL into the future. These are exciting times for Pakistan and its people, who are directly benefiting from the sale of stakes in companies like OGDCL.”

Muhammad Rafi, Managing Director and Chief Executive Officer of OGDCL, said: “It has been 11 years since we launched the initial offer for shares in OGDCL. During this time, we have successfully pursued our exploration and development programme and steadily increased our production, while rewarding our shareholders with attractive returns and on-going value creation.

“OGDCL is the largest upstream player in Pakistan and we believe that the company is well placed to take advantage of new opportunities in the market which will further cement our leadership position.”

“In our 2014 fiscal year, we added 29 new exploration licenses and completed eight exploration and appraisal wells. In 2015, we expect to continue to increase our production to enable us to respond to growing domestic energy demand in Pakistan, which currently imports nearly one third of its domestic energy requirements.”