pplCCoP set to approve floor price of PPL offering today

Cabinet Committee on Privatisation (CCoP) is to approve per share floor price of 70.05 million of GoP shares in Pakistan Petroleum Limited (PPL) on Wednesday (today), official sources told Business Recorder. Minister for Finance/ Chairman CCoP, Senator Ishaq Dar will preside over the meeting in the committee room of Finance Ministry.

Privatisation Commission (PC) will offer 70.05 million PPL shares to international and domestic institutional investors and High Net Worth Individuals (HNWI) through a book building process to be executed this week. Presently, per share price of PPL is around Rs 211, but analysts argue that if the government sets the price at around Rs 205 or Rs 206 per share, it will receive tremendous capital market response.

“Main agenda item of the meeting is to fix floor price of PPL bidding which will be held on June 26-27,” the sources added. Prior to the CCoP meeting, Privatisation Board, to be presided over by Chairman Privatisation Commission (PC) Muhammad Zubair will decide per share floor price of PPL. For divestment of up to five percent GoP shares in PPL through capital market, the PC Board on April 22, 2014 approved the appointment of consortium comprising of M/S Habib Bank Limited, Bank Alfalah Limited, Arif Habib Limited, BMA Capital Limited and Foundation Securities Limited to act as Lead Managers and Book Runners (LM&BR) for the transaction. PC Board constituted a transaction committee to provide guidance on the transaction. The transaction committee, in its meeting held on May 20, reviewed the transaction structure initially proposed by the LM&BR.

After thorough deliberations with the LM&BR, and keeping in view the transaction committee”s recommendations, past issuances trend, and market dynamics, a revised transaction structure was devised. The revised transaction structure was presented before the PC Board on June 10, 2014. The PC Board, after thorough deliberations, approved the revised transaction structure and recommended it for consideration and approval of the CCoP.

Transaction structure envisaged offering 90 percent (63.05 million shares) of the total offer size (70.05 million shares) to both international and domestic institutional investors and HNWI, through a book building process, to be executed in the last week of June, 2014, and 10 percent (7 million shares) of the total offer size to the general public through a subscription process, in August, 2014. For the general public portion, application for shares would be made for 100 shares or in multiples thereof only, to ensure that the general public was encouraged to take part in the privatisation process.

CCoP was informed on June 10, 2014, that final allotment of shares out of the book building offer will be made after receipt of full subscription money from the successful bidders. Shares to such bidders will be issued/ transferred within 7 working days, after receipt of full subscription money. When contacted, Chairman PC, Muhammad Zubair confirmed that PC Board and CCoP would accord approval of floor price of PPL”s shares on Wednesday. In reply to a question, he said, no other item has been included in the agenda except PPL because PC intends to ensure participation in the discussion by all the CCoP members.

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