A Chinese-led consortium, including the Shanghai Stock Exchange, emerged as the top bidder on Thursday for a 40% stake in the Pakistan Stock Exchange, one of the best-performing markets in Asia this year.
The Pakistan Stock Exchange, formerly the Karachi Stock Exchange, said the consortium includes three Chinese exchanges: the China Financial Futures Exchange as the lead bidder, the Shanghai Stock Exchange, and the Shenzhen Stock Exchange.
The consortium also includes two Pakistani financial institutions: Pak China Investment Company Limited and Habib Bank Ltd.
The consortium’s winning offer, subject to regulatory approval, of 28 rupees ($0.27) per share values the stake at $85.5 million, and the exchange at $213.7 million.
The Pakistan Stock Exchange has been one of the best-performing markets in Asia this year, with its benchmark KSE 100-stock index gaining 42% this year.
MSCI announced in June this year that it will upgrade Pakistan, earlier classified as a frontier market, to include it in its Emerging Markets Index.
The sale of the 40% stake is “big news not only for us, but also for the country,” said Shehzad Chamdia, chairman of the Pakistan Stock Exchange divestment committee. “I think it will be a game changer for our capital markets.”
Mr. Chamdia said the consortium’s offer is structured so that the three Chinese exchanges will have 30% of the exchange, while the two local partners will have 5% each. Along with board seats, the consortium will also get to nominate the CEO and CFO at the exchange, Chamdia said.
Pakistan has seen major Chinese investment in recent months, especially under the China-Pakistan Economic Corridor, a multibillion-dollar infrastructure program to upgrade the land route between the two countries and also boost Pakistan’s energy generation capacity.
Separately, China’s state-owned Shanghai Electric Power Co. acquired a controlling stake in K-Electric, the power utility in Karachi, Pakistan’s largest city.
Prime Minister Nawaz Sharif’s government considers boosting foreign investment a key pillar of its plan to revive Pakistan’s economy, and has pointed to the performance of the country’s stock exchange during his tenure as a sign of economic progress.