Following the Xenel sell-off deal in October 2011, National Power International Holding (NPIH) has also decided to offload its entire 17.44 percent shareholding in Hub Power Company (Hubco). National Power International Holding BV has entered into share sale and purchase agreement with Dawood Group and Allied Bank Limited to sell its entire 201 million shares of Hubco.
"Pending regulatory approval including consent from government of Pakistan the transaction would be at a price of Rs 31 per share translating into cumulative amount of Rs 6.3 billion or $70 million", analysts said. After the exit of Xenel in October 2011 and now National Power International Holding, Pakistan's second largest independent power producing company Hubco will now be primarily owned by local players, Nauman Khan, an analyst at Topline Securities said.
The Saudi based Xenel had offloaded its 140 million shares in Hubco at Rs 37 per share with total value of $60 million to selected investors. At the time of project inception in 1994 the two sponsors cumulatively owned 34.9 percent holding, ie 404 million shares with 20.4 percent by International Power and 14.5 percent by Xenel.
"The National Power International Holdings BV, one of the major shareholders of Hubco, has decided to dispose off its entire shareholding in Hubco", Abdul Azeem at InvestCap said. Dawood Group and Allied Bank Limited (Ibrahim Group already holding 44 million shares or 3.8 percent) will be the major buyers with their proposed acquisition breakup of 171 million shares and 31 million shares respectively, at an indicative price of Rs 31 per share subject to regulatory approvals, he said. In the US$ terms, the total value to be sold would stand at $68.8 million (at Rs 91/USD).
After disposition of its shareholdings, National Power Holdings will not be having any investment while all the foreign investors will be off the Hubco's shareholders' list as far as strategic holdings are concerned. Another major shareholder, Xenel, had already sold its all holdings of 140 million shares back in October 2011 at a price of Rs 37/share, which converted into $60 million outflows, he said.
"The proposed sell-off would be more like a change of hands from a foreign investor to local groups, therefore, there should be little or no fear of increased pressure as far as company's stock is concerned, as local groups would also likely keep it as strategic long-term investments", he said. It is pertinent to recall that, Hubco has as high as 80 percent free float in the market, he added.
He said new composition of the directors at the Hubco board is expected soon. The management of the company, and/or the main composition of the directors on Hubco's board, is expected to be transferred to Dawood Group, Banking Consortium, Fauji Foundation and the Ibrahim Group (Allied Bank), as these shareholders make up to 43.1 percent of the shareholdings. The election of the board of directors is scheduled in September 2012.
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