LONDON, Dec 6: Within five minutes of the commencement of trading on the London Stock Exchange (LSE) on Wednesday, the OGDC GDS price shot up by five per cent from $18.9 to $19.8 as its unconditional transactions went under way.
At the stroke of 8 in the morning as the 729 balls lying in a large, cylindrical-shaped trough began inching up and down, symbolising the daily market fluctuations, the OGDC GDS’s trading also commenced amidst clapping led by Federal Minister of Privatisation Zahid Hamid, LSC Chairman Dr Smith, Pakistan’s High Commissioner Dr Maleeha Lodhi, representatives of the OGDC and international fund managers.
The 729 balls represent the companies listed at the LSE some five years ago. The number of companies on the LSE has gone up many times since.
Later, speaking to the small gathering of well-wishers in a separate room, the federal minister said the fact that the offering had been oversubscribed by approximately two times was a strong signal of confidence by foreigners in today’s Pakistan.
Dr Smith had earlier welcomed the Pakistani officials present on the floor and said the new offering from Pakistan would open an exciting new market avenue for the country’s assets to be privatised.
Dr Lodhi shared the sentiments of the privatisation minister and said the offering and the highly positive response at the LSE indicated that Pakistan’s economy had come of age and it could stand up to international competition.
CEO of DMA capitals Farooq Khan told Dawn that the offering was a ‘huge positive’ for Pakistan and added that the international investor would now be looking at Pakistan positively.
“Every emerging market fund manager is now following Pakistan market very closely,” he added.
Michael Cole-Fontayn, MD of the Bank of New York, described the offering a very positive development for Pakistan and said the success of the offering would certainly give encouragement to the government of Pakistan and the ministry of finance in their efforts to privatise Pakistan’s assets, “and hopefully that would encourage more international attention towards Pakistan.”
When asked for his comments on the objections that the government had grossly under-prized the OGDC GDS prior to unloading it, he said the market would determine the real worth of the shares when it settled down in a month or two.
“The response at the LSE has been quite positive. For an emerging market company, the capital raised was substantial; and I think in that context, it should be viewed as a great success,” he added.
However, some other fund managers, who did not like to be named, disagreed with the methodology of the book-keeping process and said the government should have first asked the intending investors to show their interest in terms of finances and then alone fixed a price.
“Instead, the government deliberately lowered the price from Rs165 to Rs115 and then for added attraction it also allowed a 9 per cent discount,” they added.
They recalled that when the MCB GDRs were about to be unloaded on the LSE, the sponsors followed the book-keeping process to the letter by first pushing up its price from Rs180 to Rs245 and then offering only a paltry 3 per cent discount. And though it was oversubscribed by four times only $150 million were mobilised from the transaction.
They said perhaps forced by the need to urgently mobilise enough foreign resources to bridge the widening trade and current account gaps, the government had gone for what they called ‘loot sale’ of OGDC GDS and unloaded as much as 10 per cent of the shares for $813 million.
