Ahmed Khan Malik

The transfer of the government’s entire shareholding in seven entities – valuing Rs2.3 trillion (USD7.9 billion) – to the Pakistan Sovereign Wealth Fund (PSWF) will attract investment and diversify and broaden the economy, reports WealthPK. The National Assembly recently approved the Pakistan Sovereign Wealth Fund Act, 2023, resulting in the transfer of the government's entire shareholding in seven assets to the Fund. Notably, the valuations for the listed entities such as the Oil and Gas Development Company (OGDC), Pakistan Petroleum Limited (PPL), and National Bank of Pakistan (NBP) are significantly higher than their current market values, said Tahir Abbas, Head of Research at Arif Habib Limited while talking to WealthPK. The details of the state-owned enterprises (SOEs) along with their valuations have been worked out by the government, he said. According to details, the market value of OGDC has been worked out at Rs239.4 per share whereas the current market value stands at Rs107.7.

The value of PPL stands at Rs222.5 per share against the current market price of Rs76.4 per share. Similarly, the value of NBP has been estimated at Rs173.7 per share against the current market value of Rs25. The value worked out for the Mari Petroleum Limited is Rs5,315 against the current value of Rs1,640 per share.  The Pakistan Development Fund, Govt Holdings (Pvt) Limited and Neelum Jhelum Hydro Power Project are not stock listed but their valuations as per government estimates are quite attractive. The primary purpose of the PSWF is to stabilize the economy through diversification and to generate wealth for future generations. The size and number of sovereign wealth funds continue to increase, suggesting that these will remain a crucial part of the world economy in future.

The Fund aims at diversification and broadening of economy, attracting investment from other investors for development projects, creating investment models for promotion of economic growth and infrastructure development in Pakistan and increasing savings for future generations. In order to accelerate the economic growth and fulfill the requirement of infrastructure development in the country, the Fund would likely cut dependence on the government’s resources for capital formation for long-term development projects. The authorized capital of the Fund shall be Rs100 trillion and its issued capital shall be paid in cash or in kind by the federal government. The issued capital of the Fund may be increased in the manner as provided for in the regulations. The authorized capital may be increased by a resolution of the Supervisory Council.

The board shall apply the Fund resources as per the investment mandate approved by the Supervisory Council. The approved legislation says the objectives of the Fund shall be to contribute to sustainable economic development through the management of its funds and assets and to achieve optimal use of them according to the best international standards and policies to maximize their value for future generations. This purpose may be achieved through cooperation with counterpart funds or other financial institutions or any of them on a commercial basis,  thus attaining the return determined by the investment policy of the Fund. The Fund shall ensure that its investment policy is consistent with the best practices with regard to the environmental and social responsibility and rules of governance.

Credit: INP-WealthPk