Attempting to meet International Monetary Fund (IMF) loan conditions, the government is expected to raise $600 million next month by selling a stake in Habib Bank Limited (HBL).
The government owns a 42% stake in the bank — the country’s biggest lender by assets. According to Bloomberg, the government will sell a minimum of 250 million of its 609.3 million shares.
“People are taking much more interest because the government is coming up with transactions every two months,” Privatisation Commission chairman Mohammad Zubair said in an interview in London on Friday.
Prime Minister Nawaz Sharif aims to raise $2 billion from asset sales by June 30 to meet conditions attached to a $6.6 billion IMF loan.
“We are well on track to achieve the $2 billion target for this fiscal year,” Zubair said. “When we were given it, we thought it was conservative. Now, it looks much more challenging because a number of transactions got delayed. We expect to achieve it.”
However, Zubair clarified that a decision on the discount the shares will be offered at won’t be taken until just before the actual sale in late March.
Earlier on February 5, the Privatisation Commission board approved a transaction structure to sell 609.3 million shares of HBL in return for Rs129 billion.
The government was also considering selling more than 5% shares of the paid-up capital in the largest bank to a single buyer.
The financial advisers had also proposed to waive the condition of acquiring not more than 5% of the paid-up capital of HBL. But Zubair had said no decision has been taken in this regard and if the need arises, the concession could be requested from the State Bank of Pakistan and the Ministry of Finance.
HBL is the largest bank of the country in terms of assets, deposits and branch network. Its assets are valued at Rs1.74 trillion and customer deposits are estimated at Rs1.42 trillion.
The government sold a stake in United Bank Limited in June last year at a 7% discount and shares in Allied Bank Limited in December 2014 at a 3% discount.
The Privatisation Commission chairman further announced that after the sales of HBL, the government would focus on selling the first of nine state-owned power distribution companies.
The government will also seek to complete the sale of a stake in Pakistan International Airlines Corporation by March 2016, Zubair said.
The transaction will focus only on the “core” airline unit, with other operations such as ground-handling and catering being kept by the state, he added.
