ISLAMABAD: In response to cash-strapped Pakistan’s request for a new loan, the United Arab Emirates has offered to buy minority shares in publicly listed state-owned companies at a negotiated price and one seat on each board of the firm. is of. Tuesday
The development comes amid China’s decision to extend a $2 billion Pakistani debt maturing from June 27 to July 23, which brought relief to Islamabad after last week’s transfer of $2.3 billion.
The proposal, if accepted, could give a major boost to the cash-strapped government and would mark a departure from the traditional lender-borrower relationship between Islamabad and Abu Dhabi, The Express Tribune newspaper reports.
The Express Tribune quoted sources as saying that the UAE government has offered to acquire 10-12 per cent shares in state-owned companies that are listed on the stock exchange through its sovereign wealth fund.
The report quoted Finance Minister Miftah Ismail as saying, “There is a proposal from a friendly country to buy shares of Pakistani companies on a buy-back basis, which means buying secured-debt-based securities.”
Sources said the UAE had made a clear offer to acquire stake in the firms. But the government wants to add a provision in any such contract where it will have the right to buy back these stakes after a certain period.
The UAE has offered to invest $2 billion in Egypt in April this year through stake purchases in several state-owned companies, aimed at ousting the Egyptian government.
The proposal came in response to Prime Minister Shahbaz Sharif’s request for a billion-dollar bailout package during his visit to the United Arab Emirates in April. Sources said that in response to the Prime Minister’s request, the UAE had sent a delegation to Pakistan which met Sharif in Lahore in the first week of May.
Pakistan is also trying to revive the IMF program and is awaiting a draft Memorandum of Understanding (MEFP) document for economic and financial policies before arriving at a staff-level deal with the fund.
Sources said that this time the UAE was unwilling to hand over another $2 billion check to Islamabad after Pakistan failed to pay back the $2 billion loan it received in February 2019. In March this year, the UAE took out more than $2 billion in debt. for one more year.
Sources said UAE sovereign funds – Abu Dhabi Investment Authority (ADIA) and Mubadala Investment Company or Abu Dhabi National Oil Company (ADNOC) – can take exposure in Pakistan.
His interest in Pakistan could give a major boost to the share price of about 20 public sector listed companies, including companies controlled by the military’s commercial arms. Sources said that Fauji Foundation’s companies were also on the plate and the managing director of the foundation attended the meetings recently.
The top five Saudi sovereign funds from the United Arab Emirates are Abu Dhabi Investment Authority (ADIA), Dubai Investment Corporation (ICD), Mubadala Investment Company, Abu Dhabi Development Holding Company and Emirates Investment Authority (EIA). The companies are ranked in the top 20 of the Sovereign Wealth Fund Institute’s top 100 list.
There are about one and a half dozen government companies which are listed on the stock exchange and are open to hold.
Sources said that by selling 10 per cent stake in blue-chip companies, Pakistan can immediately get investment of $1 billion to $1.3 billion. But the bureaucracy was reluctant to go ahead with the transaction, delaying the entire process and irritating the UAE government, the report said.
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