Chinese consortium wins bid for 40% stake in Pakistan Stock Exchange

[Trisonics]

KARACHI:

A Chinese consortium has won the bid for a 40% stake in the Pakistan Stock Exchange (PSX) with an amount of Rs8.96 billion or roughly $85.5 million, translating to Rs28 per share.


The consortium comprises the Shanghai Stock Exchange, ShenzhenStock Exchange, Chinese Futures Exchange, Pak-China InvestmentCompany and Habib Bank Limited.

The development, which means management control of the stockexchange’s core operations goes to the strategic investors, was confirmed by the PSX divestment committee chairman Shehzad Chandia Thursday.

Earlier, the PSX received four bids from interested parties after 19 investors conducted due diligence of the exchange. These were strategic investors from China, the UK and US, equity funds and local financial institutions including MCB Bank, National Bank of Pakistan, Faysal Bank Limited and HBL.

Local institutions could not make offers for more than 5% stake each, according to laws of the State Bank of Pakistan, Securities and Exchange Commission of Pakistan and PSX.

Under the divestment policy, the PSX would now offer another 20% (160 million) shares to the general public within six months of the completionof acquisition process by the strategic investors.

This is a developing story and will be updated accordingly.

http://tribune.com.pk/story/1271951/chinese-consortium-wins-bid-40-stake-pakistan-stock-exchange/

 

[Hassan Guy]

And I am completely unaware if this is a good or bad thing.

 

[india2050]

And I am completely unaware if this is a good or bad thing.

Good for Chinese company, neutral for Pakistan

 

[DJ_Viper]

And I am completely unaware if this is a good or bad thing.

This is a really bad thing. It was done in a rush. If I was there, I would wait for the stock market to continue to go up till after 2018 when the SPEC completes, becomes operational and gives out a revenue. That would mean, a few more new cities along the route would start to grow to become future cities (focused on trade route obviously). And the GDP of Pakistan is projected to grow starting next year, so by 2020, it would be in a different league. In 2020, I would evaluate the stock market for a potential sale. At that time, based on the previous performance of the past three years, I think that the market should be around or over 100,000 points (if not double the size).

At that time, I could go, and ask for 2-3 times the evaluation. So if at that time its evaluation comes at $ 100 million (just an example), you could ask for $ 300 million and may be get over $ 250 million.

Now if you increase numbers, $ 3 billion evaluation means you could ask for $ 9 billion and get around $ 8 or so. Not sure why they did it now. May be they wanted to modernize it and bring in a more mature system for growth? That would be the only thing that would make sense.

In other words, when I know my business is growing and it can get three times the money, why sell it now? I'd wait and make 3 times more in the next three years...

 

[I S I]

Not sure why they did it. May be they wanted to modernize it and bring in a more mature system for growth? That would be the only thing that would make sense.

Yes, that's what Pakistan's govenment wanted to do.

 

[AZADPAKISTAN2009]

85 million for exchange is not alot should have been 5-10 Billion, a very low number by my estimates

The value of Stock exchange would have gone by 10,000% after Chinese / International companies would open offices in Business secto. The timing of the sale very questionable

But modernization is needed in the exchange , specially online purchase and trade so offshore Pakistani can buy directly

World wide folks can buy any security or stock just thru their Bank's online offering which is a very reliable and safe and easy system. You can drink tea and buy what you want and see when you feel like selling

Exchange makes $$$$ For every thing bought and sold by being the middle company / middle man. The more companies operate on it the more $$$$$

Sale of exchange should have been ideal after Gawadar business was in Full swing !!! with Maximum registered companies in Pakistan

 

[Hyde]

Just one of the rare decisions I didn't like with Pak-China cooperation

We shouldn't have sold for only 85 million usd

 

[Rizwan Alam]

It was a bid right?

 

[Mrc]

Pse is a private entity.. currently held by a consortium of stock brokerage firms... its their decision... and these big fishes are not fools.. i wont be surprised if the real value of deal is not being revealed to save taxes

 

[AZADPAKISTAN2009]

Stock Exchanges are Money Making COWS

• More IPO and listing on it , more shares are traded
  
• More shares are traded and more "Cuts" go to the middle man / Exchange who just manage the process

If it is known 1000-10,000 new companies would enter Pakistan one can see the value of the Exchange to rise by huge factor

85 Million is penuts considering 1 company that trades on Exchange itself can value 1-5 Billion

Selling Stock Exchange for cost of 1 Rafale hmm very ... shocking

The decision to hold Auction before completion of CPEC or when CPEC is high point is puzzling
CPEC is in its initial 10-15% stage even with all the positive good news

However if the company or group is Chinese I hope they will push the Stock Exchange to full potential and help develop it like Shanghai Stock Exchange

Just example :
Boeing Shares a prime company on Stock Exchange in USA daily trades

• Daily 4 Million trades
  
• 1.4 Billion Trades (expensive trades at $160)
• Exchange takes a CUT from the trade imagine a cut from 1.4 billion yearly Dollar

• 0.01% cut makes it 14 Million USD collection by Exchange from 1 company on 1.4 Billion worth of trades

 

[manojb]

It's not a deal, it's steal for china, 85 million!!! You guys call indian baniya, chinese are bada baniya..

 

[AZADPAKISTAN2009]

The proposal for Take over 40% must have included some proposal for Investment of capital to improve the Operation of Stock Exchange , that would be the only plus if the new investors plan to put 4-6 Billion into improving the Exchange or its reputation.

85 Million is extremely low , even a private Rich guy can buy it for that low , a bid by consortium scratching my head

The seller should have indicated a "Fair Value" estimation and approval should have been sought for when is a appropriate time for sale of such asset

Presently the CPEC project is at its infancy

Cristiano Ronaldo 1 soccer player salary is 80-90 Million dollar

So we sold the stake (Almost Half) Stock exchange for price of 1 Soccer player


I don't know but this deal should be watched carefully by NAB or Military what is happening in this deal

I think the time of sale is not appropriate for Maximum return to National Interest

 

[Rajaraja Chola]

28% stake of the nation's primary stock exchange for 85 million? Man even at 850 million dollars its a steal. Either bad reporting or outright theft.

 

[Parwez Khuri]

85 million is too low.even it is not possible at 40% stake. guys cross check it.

 

[SBD-3]

Pakistan Strategy

Ni Hao PSX

· As per media reports a consortium of China Financial Futures Exchange, Shanghai Stock Exchange, Shenzhen Stock Exchange, Pak China Investment Company Limited and Pakistan’s Habib Bank Limited were announced as the highest bidders for the PSX strategic sale yesterday, acquiring a 40% stake (320mn shares) for a consideration of USD85mn (i.e. PKR28/sh) along with management control. This is likely to be followed by a further 20% divestment by way of an IPO within the next 12 months.

· This divestment is not only a landmark transaction in the bourse’s 70 years history but a historic deal between the two great nations – China and Pakistan and will result in a game-changer for the further development of Pakistan’s capital markets. A number of positives for PSX include i) influx of liquidity emanating from the sale i.e. USD 85mn, majority of which could potentially flow to the local bourse through TREC holders, which would possibly be further augmented by a subsequent IPO of 20%, ii) cross border investments taking cues from the Shanghai-Hong Kong Stock Connect and Shenzhen-Hong Kong Stock Connect, that could allow investors to trade across borders, iii) introduction of new products that will increase the depth of the market; including derivatives (options & futures), fixed income and ETFs, iv) introduction of new technology that will increase the investor base, especially retail investors, and v) lending further visibility and transparency for foreign investors.




Mubashir Anis Silat, CFA

T +92 21 111 354 947, Ext.3144, E: manis@elixirsec.com