House Building Finance Corporation Limited (HBFCL) plans to float 282 million shares

[LahoreEstate]

MUHAMMAD ALI
KARACHI (May 23 2009): The management of House Building Finance Corporation Limited (HBFCL) is planning to float some 282 million (41 percent) shares in the market to overcome financial crunch, it has been reliably learnt. Details made exclusively available to Business Recorder on Friday revealed that the corporation would offer pre-IPO to the International Finance Corporation (IFC) of 69 million shares (Rs 0.68 billion), which would be 10 percent of the total number of shares.

Bifurcated, proposed shareholding pattern said that around 179 million shares amounting to Rs 1.79 billion, some 26 percent of the total shareholding, would be divested to strategic investors while remaining 5 percent shareholding, around 34 million shares, would be offered to HBFCL employees.

Official sources said that Zaigham Mehmood Rizvi, former chairman and managing director, HBFCL had initiated the process of privatisation and had sent a requisition of listing the corporation in the stock market some two years back. They said the issue surfaced when the debt equity swap of two overdue instalments of the SBP credit lines swelled to Rs 3.2 billion, hence privatisation decision taken to overcome the liquidity crunch besides generating sufficient capital for business purposes.

They said the management of HBFCL has evolved time-based roadmap for its privatisation, adding that the corporation would divest its 41 percent shares by the end of next fiscal year. They said that HBFCL with the consent of the Ministry of Finance had sought the IFC technical assistance for the preparation of a business and capacity building plan in 2005-06, adding that the IFC, after an international bidding, had appointed M/s Canadian Mortgage and Housing Corporation (CMHC) to undertake the exercise.

M/s CMHC after a detailed study of the Pakistan's mortgage market and due diligence of HBFCL, prepared and submitted a detailed business plan in February 2007. They said that CMHC recommended financial restructuring and support to be provided by the government and had also suggested providing fund-based support for its restructuring and privatisation.

To a question, they said that the government had not appointed any regular MD in 2008 hence no action was taken for restructuring and privatisation of HBFCL. They, however, said that efforts are on again to restructure and privatise HBFC after the appointment of Azhar A Jafferi as managing director. Moreover, they said that the IFC and the SBP have assured their full support, adding that if HBFCL needed financial support for privatisation, the World Bank has also offered assistance in this regard.

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