ISLAMABAD — Mansour Al Mosaid Limited Company has acquired 88% shares in its rival National Power Construction Corporation (NPCC) at a cost of Rs2.5 billion, which is Rs530 million higher than the minimum price set by the government.
The divestment of government’s stake in NPCC marks the beginning of strategic sale of state-owned enterprises after a gap of 10 years.
The Cabinet Committee on Privatization (CCoP) also gave approval to the Rs2.5 billion bid price, allowing the Privatization Commission to issue the letter of acceptance to the bidder.
Saudi Arabia-based Al Mosaid Group’s bid was also Rs871 million higher than the second highest offer made by the consortium of Habib Rafiq Limited and Frontier Works Organization that valued the shares at Rs1.63 billion or Rs925 per share.
The third bidder, a consortium of Zahir Khan Brothers and Reliable Engineering Limited, offered Rs606.3 million or Rs344.5 per share.
The CCoP had set the minimum reference price at Rs1,119 per share or Rs1.969 billion for the 88% stake in NPCC, which is engaged in the business of engineering and construction.
After receiving the letter of acceptance, the bidder will have one and a half months to pay the dues and enter into a sale-purchase agreement. The Al Mosaid Group priced the NPCC share at Rs1,420, valuing the company at Rs2.84 billion. The price offer was slightly higher than the expectation of Finance and Privatization Minister Ishaq Dar, who hoped that the bid would touch Rs1,400 per share.
The sealed financial bids of the three bidders were opened by the representative of media persons. “This is an evidence of transparency in the bidding process,” said Privatization Commission Chairman Mohammad Zubair.
The bids of the other two consortia were below the reference price.
“There is nothing better than a Saudi company acquiring a Pakistani firm,” said Zubair, after finishing the open bidding process. He said the company would bring $24.5 million.
The government had offered 1.76 million shares for acquisition. The remaining 12% or 240,000 shares are in the hands of employees of the company under the Benazir Employees Stock Option Scheme.
Mansour Al Mosaid Company is a direct competitor of the NPCC. Both the companies have the same nature of business. The acquisition will strengthen businesses of the Al Mosaid Group as with the purchase, the group has also won the clients of NPCC.
The Al Mosaid Group’s net worth is Rs4.94 billion and has a workforce of 4,000 including 2,700 employees of Pakistani origin.
NPCC is a profitable enterprise and in fiscal year 2014, it earned a net profit of Rs128 million. Its total assets grew to Rs6.6 billion in the year while liabilities stood at Rs4.8 billion, leaving a net equity of Rs1.8 billion. The company has been giving out regular dividends to its shareholders.
It will be the first strategic sale in the last 10 years, said Zubair, who was desperately looking for a success story after cancellation of the sale of Heavy Electrical Complex. Because of lax due diligence by the commission and allegedly shabby background of the HEC buyer – Cargill Holdings Limited, the HEC deal was scrapped.
Zubair said the NPCC privatization would provide a boost to the upcoming big sales including Pakistan International Airlines, Pakistan Steel Mills, Kot Addu Power Company and Faisalabad Electricity Supply Company. — Agencies