Nishat Mills intends to buy FESCO
KARACHI: In a bid to takeover another valuable national asset, Nishat Mills Limited (NML), a conglomerate of Nishat Group, has announced its expression of interest to acquire Faisalabad Electric Supply Company (FESCO) officially on Tuesday.
NML has announced its interest in FESCO privatisation publicly through the stock filings stating that the company is submitting expression of interest with Privatisation Commission of Pakistan to take part in privatisation of 74% shareholding in FESCO.
By successful completion of this expression of interest, the company would also be eligible to acquire management control of FESCO, which is currently owned by the Government of Pakistan.
The NML mentioned in the notice to bourses that decision regarding management control of FESCO’s is still open as the company stated that management control of FESCO, if bid is succeeded, may be shared with other group companies and associates of the company or it will be controlled individually or within the consortium.
The company has been pursuing FESCO for some time as Pakistan’s largest financial-industrial conglomerates had shown interest in buying out the state-owned FESCO in 2011 while the government even did not announce its intention to sell off FESCO.
FESCO is one of the most efficient power distribution firms in the country and now the government has decided to sell off its majority of assets to private firms in order to follow the International Monetary Fund (IMF)’s instruction and government has set the timeframe to sell FESCO by June 2016 in line with IMF’s guidelines.
The Privatisation Commission has invited an expression of interest from prospective bidders for the strategic sale of 74% shares of FESCO besides handing over management control. The deadline for submission of the state of qualification is December 31.
The government has decided to privatise profit-making power distribution companies in the first phase, initially FESCO. Three most profitable power distribution companies including FESCO, Lahore Electric Supply Company (LESCO) and Islamabad Electric Supply Company (IESCO) would be privatised in the first stage. Meanwhile, loss-making power distribution companies including Multan Electric Power Company (MEPCO), Hyderabad Electric Supply Company (HESCO) and Peshawar Electric Supply Company (PESCO) would be privatised later.
The profitable FESCO would be privatised first in by June 2016. The Cabinet Committee on Privatisation had approved the FESCO transaction structure on October 2, 2015. FESCO had earned profit worth Rs 29.69 billion during previous year 2014 as against Rs 24.05 billion of the preceding year 2013.
FESCO has total assets worth Rs135.95 billion. Nishat Group is one of the leading business groups in South East Asia with fixed/ current assets of over Rs 300 billion ($ 5 billion), it ranks amongst the top five business houses of Pakistan. The group has strong presence in three most important business sectors of the region namely textiles, cement and financial services.