Successful divestment of 40 percent shares can usher in a new era of boom for investors
Ever since the country’s three bourses merged in January 2015 into the Pakistan Stock Exchange (PSX) the latter was on the lookout for a major investor to enlarge its scope and reach, and to help in diversifying its operations along modern lines. It has found what appears to be the ideal one in the shape of a consortium of three Chinese companies, and two local institutions. This is another first in Sino-Pak friendship, as it is China’s maiden bourse acquisition abroad. Through this deal, a total of 320 million shares will change hands, and the input of US$85 million will reportedly enhance the book value of the PSX to an estimated US$213 million, when the entire exercise is completed.
What stands out in this complicated process of divestment is its transparency and above-board aspect, a welcome change from the ugly controversies that usually mar such exercises in our environment. The matter seems to have handled in a professional manner from beginning to end, and should be a lesson, particularly for the Privatisation Commission.
The entry of the Chinese consortium is especially auspicious because it is not an opportunistic foray for making quick bucks, but a long term strategic investment that can dovetail neatly with much needed investment in companies associated with the CPEC project. As the management control of core PSX policies passes into the hands of the consortium, it would bring in an experienced and upright corporate culture, new financial products, technological advances, speedier transactions, local investor access to other markets and vice versa. Above all it is likely to introduce an element of stability in the usually volatile local bourses, which were riddled with irregularities and illegal speculation in the past. But if only a bit of the Chinese work ethic rubs off on our blue and white collar labour force, that alone would be an excellent return. The Chinese are hard taskmasters despite their ancient saying that, ‘a man without a smiling face should not open shop’.