The PML-N government has stepped forward to trigger the privatisation process, which had remained stalled for over seven years.

The website of the privatisation commission shows that the last major transaction took place as far back as in 2006, when the sale of 73pc shares of the Karachi Electric Supply Company (now K-Electric) was completed.

Having announced its intention to sell equity in 31 public sector enterprises, the privatisation commission (PC) last week invited Expression of Interest (EoI) for the appointment of financial advisor for the offering of up to 10pc of the government’s holdings in the Oil and Gas Development Company (OGDC) — the largest oil and gas explorer in the country.

The PC also invited EoIs for appointment of lead managers and book runners for offering of up to 5pc of the government’s stake in Pakistan Petroleum Limited and its residual holding of 20pc in the United Bank Limited (UBL).

“The government could raise up to $1.5bn from these three intended offerings,” says Arif Habib, a former chairman of the Karachi Stock Exchange (KSE). He asserts that it is a win-win situation for both the equity market and the government.

“For the market, which is still starved of new issues, the offerings will provide larger free float and create further depth,” says the broker-turned industrialist. The funds generated from the sale will provide the government resources to invest in infrastructure projects, like the planned coal-fired power plants, he observes.

Mr Habib also maintains that there could be no better time to offload state-held equity than now, as the government is likely to fetch attractive prices for the stocks at the elevated share index level.

At the moment, the state holds 85pc shares in OGDC, which, at the ruling market price of the stock, works out at Rs998bn. It has a 78pc stake in PPL valued at Rs380bn, and a 20pc holding in UBL that is worth Rs36bn.

“The three stocks carry a cumulative market price of Rs1,414bn, equivalent to $14.4bn at a rupee-dollar parity of Rs100,” calculates Vahaj Ahmed, an analyst at Topline Securities.

Market participants are enthused by the prospect of the new offerings. Equity investors, though woefully low at just 0.3 million in a population of over 180 million, have nonetheless reaped rich returns of over 100pc in the last two years due to galloping stock prices.

“The thriving property market and average profit growth of a whopping 150pc for textile companies in FY13, have unleashed enormous liquidity from high net worth individuals, which could be utilised to absorb the offerings,” says Mohammed Sohail, CEO of Topline Securities.

He also points out that foreign investors, who have been at the forefront of the current rally, are craving for more float of first-tier scripts.

A collateral benefit of the larger float of high-valued, government-divested stocks would be the increase in the weightage of Pakistan’s equity market in the Morgan Stanley Composite Index (MSCI) Frontier Markets Index — a widely used tool by foreign fund managers for allocation of funds to frontier and emerging markets.

Bulls at the KSE are even looking at the prospect of Pakistan’s re-entry into the emerging market segment, from which it was demoted to frontier markets after the ‘floor’ debacle during the 2008 equity meltdown.

“In case Pakistan is able to find a place in emerging markets, it can look forward to more foreign portfolio inflows,” says a market guru.

Khalid Mirza, former chairman of the Securities and Exchange Commission of Pakistan, sees nothing wrong in the divestment of a part of the government’s equity in companies.

Yet, he says the proceeds ought to be used for public sector development projects, and points out that profitable companies under the government yield Rs60bn annually, against a loss of Rs18bn by loss- making units. “So why sell family silver, instead of getting rid of perennial loss making units?”

For small shareholders in the stock market, the OGDC offer would be a sweet and sour reminder of the company’s first public offering more than 10 years ago.

Most small investors made their first foray into the equity market on November 25, 2003 to subscribe to the government’s initial public offering of Rs9.6 million worth of OGDC stock, at Rs32 a share. It was the biggest stock offering in the history of the country, and was subscribed by the highest-ever number of shareholders.

The gains made in the subsequent surge in the stock’s price enriched both the market and the investors. Yet, OGDC was the main culprit in the 2008 stock market crisis that turned many small investors into paupers. A share of OGDC has now climbed back to around Rs270.