The privatisation of Pakistan State Oil Ltd, National Refinery Ltd, and Pakistan Telecommunication in the coming months may increase liquidity in the market, especially at the financial institutions, as they would re-deploy these funds in the capital market. The inflows from NRL can be a driver for the liquidity in the economy and the market.
The final bidding of the company is to be held on May 31. The government has received Expressions of Interest (EOI's) from 29 parties.
"We expect the privatisation price to range from Rs 375 to Rs 425 per share. This would bring about Rs 12.74 billion to Rs 14.4 billion from the transaction," said Fawad Khan, research analyst at Alfalah Securities.
Party-specific reason, perception of economic and industry fundamentals and competition among the bidders may result in higher bidding price. "We believe that NRL can bring in a liquidity influx into the market. Around 59.37 percent of the shares of NRL are held by financial institutions", he said.
NIT holds around 20 million shares of the company (out of which 19.9 million are held for NBP Trustee Department); Picic Growth Fund has 5.39 million shares; and National Bank of Pakistan has around 1.02 million shares.
The privatisation price for the company would range between Rs 375 and Rs 425 per share. "We have taken two extreme case scenarios and analysed how much liquidity would the transaction bring into the market."
In 'Case A' (if price: Rs 375), there would be a total influx of Rs 10.03 billion. In Case 'B' (Privatisation price: Rs 425), there would be an influx of Rs 11.37 billion for NIT, Picic Growth Fund and National Bank of Pakistan. NIT is poised for the greatest liquidity gain of around Rs 7.6 billion to Rs 8.6 billion. We believe that NIT unit might be an attractive investment avenue at the moment."
Seven companies are serious contenders to acquire management stakes in NRL. These are Al Ghurair Investments; Attock Oil Group; Fauji Foundation; KPC Holdings (Aruba) AEC; Orient Petroleum Inc Consortium; Pakistan Refinery Limited; and GML Capital (Pvt) and Consortium including National Refinery Employees Trust. In all, 11 parties were pre-qualified for NRL to acquire 33,985,788 shares (51 percent strategic stake) in NRL.
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