In response to cash-strapped Pakistan’s request for new loans, the UAE has offered to buy minority shares in publicly listed state-owned companies at a negotiated price and a seat on each of the company’s boards. the company, according to a media report on Tuesday.
The development comes as China moved to refinance another $2 billion Pakistani debt that matures from June 27 to July 23, offering a sigh of relief to Islamabad after transferring $2.3 billion in the week. last.
The offer, if accepted, could give a big boost to the cash-strapped government and will mark a break with the traditional lender-borrower relationship between Islamabad and Abu Dhabi, The Express Tribune newspaper reported.
The Express Tribune citing sources said the UAE government had offered to acquire 10-12% of the shares of public listed companies through its sovereign wealth funds.
There is a proposal from a friendly country to buy shares of Pakistani companies on a buy-back basis, which means buying securities based on secured loans, said Finance Minister Miftah Ismail, quoted in the report .
The sources said the UAE had made a clear offer to acquire stakes in the companies. But the government wanted to add a provision in any such contract where it will have the right to buy out those stakes after a certain period, they added.
The UAE made the offer that it invested $2 billion in Egypt by buying stakes in a number of state-owned companies in April this year in a bid to bail out the Egyptian government.
The offer came in response to Prime Minister Shehbaz Sharif’s request for a multi-billion dollar bailout during his visit to the United Arab Emirates in April. The sources said that in response to the prime minister’s request, the UAE sent a delegation to Pakistan who met with Sharif in the first week of May in Lahore.
Pakistan is also trying to revive the IMF program and is waiting for the draft Economic and Financial Policy Paper (MEFP) before reaching a staff-level agreement with the fund.
The sources said that this time the UAE was reluctant to hand over another $2 billion check to Islamabad, after Pakistan failed to repay the $2 billion loan received in February 2019 In March this year, the United Arab Emirates carried over $2 billion. billion in debt for one more year.
The sources said that UAE sovereign wealth funds, Abu Dhabi Investment Authority (ADIA) and Mubadala Investment Company or Abu Dhabi National Oil Company (ADNOC) – may expose themselves to Pakistan .
Their interest in Pakistan could boost the stock price of some 20 listed public sector companies, including companies controlled by the military’s commercial arms. The sources said Fauji Foundation companies were also on the plate and the foundation’s chief executive recently attended the meetings.
The five major Saudi Sovereign Wealth Funds in the UAE are the Abu Dhabi Investment Authority (ADIA), Dubai Investment Corporation (ICD), Mubadala Investment Company, Abu Dhabi Developmental Holding Company and the Emirates Investment Authority (EIA). Companies are ranked in the top 20 of the Sovereign Wealth Fund Institute’s Top 100 list.
There are about a dozen and a half public companies listed on the stock exchange and open for sale.
The sources said that Pakistan can immediately get an investment of $1 billion to $1.3 billion by selling 10% shares of blue chip companies. But the bureaucracy was reluctant to move forward with the deal, delaying the whole process and angering the UAE government, the report said.
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