NIT launches Rs 20bn SEF to back jittery stocks

[Naveed Yaseen]

By Tanveer Ahmed
KARACHI: National Investment Trust (NIT) Thursday launched the long-awaited Rs 20 billion NIT-State Enterprise Fund (SEF) aimed at supporting the stock market.

“NIT is now in a position to launch the NIT-SEF without any delay and has completed all the necessary legal work in this regard,” Chairman NIT, Tariq Iqbal Khan told a news conference. The fund was announced by the government two-and-half months back to stabilise the stressed out stock market.

The launching of fund took a little longer as it involved a lot of legal work in getting the fund registered as well as signing of agreements with the financing institutions along with the approval of guarantees by the government, Mr Khan maintained.

The contributors of fund are National Bank of Pakistan (NBP), which will invest Rs 7 billion, Employees Old Age Benefit Institution (EOBI) Rs 5 billion, State Life Insurance Corporation (SLIC) Rs 2.5 billion and a consortium of banks will contribute remaining Rs 5.5 billion.

This fund can only invest in eight eligible stocks —OGDC, PSO, PPL, SNGPL, SSGC, KAPCO, NBP and PTCL. “Under the trust deed signed for the registration of this fund, this fund cannot be utilised to invest in the scrips other than the above mentioned stocks,” NIT chief said.

He said that fund would sell the units to the overseas Pakistanis after initial operation and market stabilisation. “Though finance adviser has asked for the sale of units only to overseas Pakistanis, but I will try to broaden its scope to include locals also, once the fund starts investing in the stock market,” Chairman NIT maintained.

He, however, skipped the question about the timeframe for investment of this fund although finance adviser Shaukat Tareen has already declared that Rs 20 billion would be released next week to support the sinking stock market.

About the conditions attached with the contribution of financial institutions in this fund, he said that they would finance at “KIBOR+1” and the financed amount would be paid-off after a period of three years. However, NIT could pay back this amount even before this period, if it is in a position to return the borrowed money from these institutions.

He said that invested amount of these institutions has been secured through the government guarantees.

NIT chief was hopeful that the fund would perform better and owing to the strong fundamentals of the eight eligible stocks. “It would send positive signals to the market, which is overly depressed.”

The rate of declining of the stock market, he pointed out, has dropped to 1.9 percent in today’s session from four percent on December 15, 2008 when floor was removed.

About the IMF condition on use of public money for stock market, Khan said that IMF has the objection on the money with the national exchequer whereas this fund is not from the exchequer.

He also clarified that NIT-SEF is separate fund in all respects from the existing funds being managed by NIT.

http://www.dailytimes.com.pk/default.asp...2009_pg5_1