KARACHI, Sept 9 With two days remaining for book closure, the simmering proxy war for securing a seat on the board of directors of the Hub Power Company Limited has intensified.

Members on the roll on Sept 14 (before the book closure) would be entitled to vote.

Elections would be held at the shareholders' meeting on 29th at which as many as 18 contestants are expected to be in the run for a seat on the 12-member board.

The company's annual report for year ended June 30, shows that foreign sponsors, National Power International Holding B.V (202 million shares) and Xenel International (140 million shares) together hold close to a third of the total 1,157 million shares in the company. A member with an eye on such developments recalled that at one preceding elections (held every three years), 'locals' had made an unsuccessful bid to wrestle majority stake in the company from sponsors. But as large chunk of equity holdings have always belonged to several visibly unrelated groups and financial institutions, foreign sponsors rightly banked upon a split within the ranks of the rivals.

“No one is suggesting that a hostile take-over bid may actually be in the offing this time around too, for most shares are securely held by the foreign sponsors, which entitles them to place at least eight nominees on the board,” says this member.Hubco has 14,056 shareholders on its register of members. Individual investors who could be as many as 13,570 command 13.60 per cent of the equity interest and therefore that much of the voting power. The six aspirants to the board are understood to be mainly nominees of some of the biggest conglomerates and financial institutions.

Interestingly, 163 joint stock companies have managed to accumulate 43 per cent shares in the company, followed by 48 financial institutions with 18 per cent of the total shares.

“Many of those companies and institutions secured Hubco shares during the fag end of 2008 and early this year, when the stock market was at its rock bottom and the Hubco stock price melting away to as little as Rs14 a share,” says an analyst.

Some of the groups, which are in the business of banking to textile and cement and much more, are now vying to push their nominee on the Hubco board by surreptitiously collecting as many 'proxies' as possible. But why must they do that? “It's all a matter of 'prestige', a candidate in the run representing a large business group confided, on condition of anonymity.

“Local businesses wish to express pride on having added an internationally reputed representative of National Power to their list of major investment portfolio,” says he.

But some corporate watchers suspect it to be “power play.” One pointed to the importance that 'power' (electricity) had assumed in the recent times. In the last elections, the Mansha group, arguably one of the most powerful in the country managed to place two nominees on the Hubco board.

“This year, the group has announced setting up of two Independent Power Plants (IPPs) — Nishat Power and Nishat (Chunian) Power- both making IPOs and the only companies to secure listing at the KSE this year.”

Sajid Bhanji, VP at Arif Habib Capital Market, said that other groups may also be hoping to draw on the expertise of Hubco—one of the two largest IPPs in the country. He says “To put a company nominee on the board also signals the group's intention and confirmation of conforming to 'international best practices of corporate governance', which raises its value in the eyes of local and foreign investors'.

One conspiracy theorist was, however, whispering that some banks and financial institutions may have one eye on the cash-rich Hubco, which made them eager for membership of the board so as to try and influence the flow of funds to their own banks.

As on June 30, Hub Power held Rs1 billion on the balance sheet as 'cash and bank balances'.

The company has a long list of 11 banks as its 'principal bankers'.

Most people at the market, however, brushed aside such suggestion as rubbish.

“It would amount to 'conflict of interest', with which company, such as Hubco, would be least inclined to let its reputation be stained,” they say.