Islamabad:
The Government can send a delegation of the privatization commission to the United States to seek consultants to advance in the transaction of administering the Roosevelt High Value Hotel, New York, in association with the private sector. The Privatization Commission has submitted a summary for the approval of Prime Minister Shehbaz Sharif for the advisor’s visit to the Privatization and the Privatization of the Secretary from August 20 to 24, according to the sources. The Government will spend approximately RS3 million on the visit of the delegation of two people to the United States.
It is unusual for a government team to travel abroad to attract financial advisors for privatization transactions. While Roadshows have been carried out in the past, they were mainly to commit to potential buyers of government entities or assets, not to ensure advisors. The Government has already announced in the local and foreign press, seeking expressions of interest of new financial advisors before September 2, after the resignation of the previous advisor due to a conflict of interest.
Initially, Pakistan had hired an American real estate management company for the privatization of the Roosevelt hotel at a total cost of approximately RS2.2 billion. He had already paid $ 1.1 million to the company, which left the transaction last month citing a “conflict of interest” and offered to return payments. Jones Lang Lasalle (JLL) had been selected to develop a transaction structure for hotel privatization.
The Roosevelt hotel, located in the heart of a global shopping center and tourism, is currently owned by Pakistan International Airlines (PIA). Pia has the hotel through Pia-Investment Limited, which has its participations through a subsidiary registered in the British Virgin Islands. Based on the work done by the previous financial advisor, the Government has already approved the transaction structure for the Roosevelt Hotel, New York.
Of the three options evaluated by the financial advisor (direct sale, a joint company with multiple options and long -term lease, the joint business model with multiple options was approved. Last month, the Government declared that the joint business option aims to maximize the long -term value for the country while guaranteeing flexibility, multiple output opportunities and minimization of future tax exposure.
After JLL withdrawal, there may be doubts among possible financial advisors about Pakistan’s commitment to the transaction, said Muhammad Ali, advisor to the Privatization Prime Minister, explaining the logic behind the United States’s visit. He said that meetings with at least six possible financial advisors have already been scheduled from August 21 to 22, and the visit is oriented to the results. He added that it is necessary to assure the potential advisors that most of the work based has been completed and that the Government has finished the joint business option.
The Government has organized meetings with Citibank, Coldwell Richard Ellis (CBRE), a real estate service provider, Savills, Gray Steel, Ankura and Cushman & Wakefield. Two of these companies had participated in the previous hiring round for the role of financial advisor.
According to the financial advisor’s report on the structure of the transaction, Pakistan will not need to contribute additional funds for the joint company, since their participation will be in the form of the hotel value of the hotel. “Based on pre-marketing, due diligence and analysis of the options, the structure of the joint company obtains the highest value for the Pakistan government,” said the advisor in his report. The value of the Earth will be calculated based on its full potential, including the 32 -story building. The development partner will make two initial deposits. “This option entails the greatest risk, but also offers the highest net income to Pakistan,” said the advisor in the report presented last year.
ZTBL transaction
On Friday, the Privatization Commission signed the Financial Advisory Services Agreement for the privatization of Zarai Taraqiati Bank Limited (ZTBL). He has hired a consortium led by Next Capital Limited. Other members of the Consortium include Ijaz Ahmed & Associates, Baker Tilly Mehmood Idrees Qamar, Network International Executives, Bridge Public Relations, Savills Pakistan (PVT) Limited and Global Consulting Prima (PVT) Limited.
Post-privateization, ZTBL, with its national network of 501 branches, will be better positioned to provide a more accessible credit to small farmers and rural communities. It will also introduce modern banking technologies and digital solutions for agricultural financing, according to the Privatization Commission.
However, concerns have been raised that after the privatization of ZTBL, there can no longer be a financial institution totally dedicated to meet the needs of small farmers. Most of the main banks do not attend to small farmers, and there are doubts about their claims to provide loans to this sector. The sources also indicated that the Central Bank does not accurately reflect real loans to farmers, since loans to agrode industries are also classified as agricultural loans.
According to the agreement, the financial advisor will carry out the due diligence on the side of the sale, will make a sound of the market, will be involved with possible investors, structure the transaction, market it to investors and help the privatization commission to guarantee a transparent bidding process, according to the press release.
