Fauji Fertilizer keen in acquiring stake in PIA
KARACHI: In a significant development for Pakistan's corporate and aviation sectors, Fauji Fertilizer Company Limited (FFC) has formally announced its intention to explore a potential acquisition of stakes in Pakistan International Airlines Corporation Limited (PIACL), the country's national flag carrier.
In a disclosure to the Pakistan Stock Exchange (PSX), FFC revealed that its Board of Directors, during their recent meeting, approved the submission of an Expression of Interest (EOI) and prequalification documents to the Privatization Commission of Pakistan. This strategic move signals FFC's growing interest in participating in the ongoing privatization process of state-owned enterprises, particularly the financially troubled national airline.
The board also sanctioned a comprehensive due diligence exercise to thoroughly assess PIACL's financial, operational, and legal standing before any final investment decision. The official disclosure was signed by Brig Khurram Shahzada (Retd), Company Secretary of FFC, and filed in accordance with Sections 96 and 131 of the Securities Act, 2015, and Clause 5.6.1 of the PSX Rule Book.
Pakistan's Fauji Fertilizer seeks entry into aviation, eyes PIA acquisition
Industry analysts view this cross-sector interest as a bold diversification strategy for one of Pakistan's leading fertilizer manufacturers. If it proceeds, it would mark a rare entry of an agro-sector giant into the aviation industry, potentially setting a precedent for other corporates to explore similar opportunities.
This development comes as the federal government accelerates efforts to privatize loss-making state-owned enterprises under its broader economic reform agenda. PIACL, burdened by mounting debts, operational inefficiencies, and persistent financial losses, has remained on the privatization list for several years.
A previous privatization attempt in late 2024 collapsed after receiving only one bid of Rs?10 billion, far below the government's reserve price of Rs?85 billion. Investor confidence was undermined by PIACL's heavy debt burden, an 18 percent sales tax on new aircraft, and a lack of clear financial safeguards. The failed effort cost the exchequer $4.3 million in advisory fees and forced the government to reassess its strategy before re-launching the process in early 2025.
As part of its renewed privatization push, the federal budget for 2025–26 introduced a major incentive, granting GST exemptions on aircraft imports and leases, effective retroactively from March 19, 2015. The waiver covers complete aircraft (purchased or leased), spare parts, maintenance kits, simulators, engines, and key Maintenance, Repair, and Overhaul (MRO) equipment. This broad tax relief aims to ease PIACL's financial burden, improve operational capacity, and enhance its appeal to private investors.
Market observers believe that FFC's interest could inject much-needed momentum into the privatization drive and encourage other institutional investors. In its commentary, AKD Securities noted that this follows the government's major restructuring of the national carrier, carving out net liabilities of PKR 654 billion and non-core assets into PIA Holding Company Ltd. (Holdco) — effectively transforming PIACL into a debt-light entity. Notably, the airline was EBITDA-positive in CY24, with a reported equity value of PKR 3.6 billion as of December 2024. With PKR 147 billion in cash and short-term investments on a standalone basis as of March 2025, FFC possesses the financial strength to pursue such a transaction, analysts added.
The government's decision to privatize PIACL arises from years of financial losses, mismanagement, overstaffing, an aging fleet, and persistent operational challenges.
Copyright Business Recorder, 2025
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Business Recorder
an hour ago
- Business Recorder
KSE-100 nosedives nearly 3,900 points as US-Iran tensions spike
Intense selling pressure gripped the Pakistan Stock Exchange (PSX) on Monday amid escalating geopolitical tensions following a US attack on Iran, with the benchmark KSE-100 settling with a loss of nearly 3,900 points. Bearish sentiments prevailed throughout the trading session, dragging the benchmark index to an intra-day low of 115,887.49. At close, the KSE-100 Index settled at 116,167.47 level, a decrease of 3,855.77 points or 3.21%. This is the lowest level seen after May 9, 2025, said Arif Habib Limited (AHL), in a note. Across-the-board selling was observed, especially in key sectors including automobile assemblers, oil and gas exploration companies, OMCs, power generation, refinery and commercial banks. Index-heavy stocks, including HUBCO, OGDC, PPL, POL, MARI, and PSO, settled in the red. During the previous week, the PSX endured turbulence as a combination of rising geopolitical tensions in the Middle East, volatile international commodity prices, and mixed domestic economic indicators rattled investor sentiment. The benchmark KSE-100 Index remained in sharp retreat from its recent highs. On a week-on-week basis, the benchmark settled at 120,023.23 points, reflecting a 1.7% decline compared to the previous week's close at 122,143.57 points. Internationally, shares slipped in Asia on Monday and oil prices briefly hit five-month highs as investors anxiously waited to see if Iran would retaliate against US attacks on its nuclear sites, with resulting risks to global activity and inflation. Early moves were contained, with the dollar getting only a minor safe-haven bid and no sign of panic selling across markets. Oil prices were up around 2.8%, but off their initial peaks. Optimists are hoping Iran may back down now that its nuclear ambitions have been curtailed, or that regime change might bring a less hostile government to power there. Stocks slide, oil and gold jump after Israel strikes Iran One key factor will be access through the Strait of Hormuz, which is only about 33 km (21 miles) wide at its narrowest point and through which around a quarter of global oil trade and 20% of liquefied natural gas supply passes. For now, Brent was up a relatively restrained 2.7% at $79.12 a barrel, while U.S. crude rose 2.8% to $75.98. Elsewhere in commodity markets, gold edged down 0.1% to $3,363 an ounce. Share markets were proving resilient so far, with S&P 500 futures off a moderate 0.5% and Nasdaq futures down 0.6%. MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.5, and Japan's Nikkei eased 0.9%. Europe and Japan are heavily reliant on imported oil and LNG, whereas the United States is a net exporter. Meanwhile, the Pakistani rupee posted a marginal decline against the US dollar, depreciating 0.06% during trading in the interbank market on Monday. At close, the local currency settled at 283.87, a loss of Re0.17 against the greenback. Volume on the all-share index increased to 595.01 million from 421.64 million recorded in the previous close. The value of shares improved to Rs23.49 billion from Rs15.65 billion in the previous session. WorldCall Telecom was the volume leader with 53.30 million shares, followed by Sui South Gas with 35.99 million shares, and Pervez Ahmed Co with 24.02 million shares. Shares of 468 companies were traded on Monday, of which 56 registered an increase, 386 recorded a fall, while 26 remained unchanged.
Business Recorder
2 hours ago
- Business Recorder
Dost Steels to raise Rs4.45bn via rights issue to fund billet production
Dost Steels Limited, a Pakistani steel manufacturer, plans to raise Rs4.45 billion (USD 15.6 million) through a rights issue to fund the installation of a melting furnace. The listed company disclosed the development in its filing to the Pakistan Stock Exchange (PSX) on Monday. The quantum of the right issue is approximately 100% of the existing paid-up capital of the company, i.e. approximately 100 right shares for every 100 ordinary shares held by the company's shareholders. As per the filing, the company shall issue 444,695,577 ordinary shares, at par, that is at a price of Rs 10/- per right share, aggregating to Rs4.45 billion. The steel maker said that the purpose of the rights issue is to raise funds for the installation and commissioning of a melting furnace to produce billets. Additionally, the funds will be used to meet the company's working capital requirements. Dost Steels secures Rs2.08bn investment DSL shared that by setting up the melting furnace, the company will be producing billets, which are essential raw materials for producing the end product. 'This will significantly reduce raw material costs, leading to improved profit margins,' it said. Moreover, the project will boost operational efficiency, provide enhanced supply chain control, and support the business's long-term sustainability. 'These improvements are anticipated to result in increased profitability and shareholder value, thereby strengthening the company's financial position and competitive standing in the market,' it said. The company was of the view that the right issue is being carried out at a price, which is near the current market price, and hence, there is no major risk associated with it. However, normal risks associated with the business will remain. On Monday, the share price of DSL settled at Rs7.24, a decrease of Re0.18 or 2.43%.
Business Recorder
3 hours ago
- Business Recorder
PSX plunges amid US-Iran tensions, KSE-100 sheds over 3,900 points
Selling pressure was observed at the Pakistan Stock Exchange (PSX) amid escalating geopolitical tensions following the US attack on Iran, raising concerns among investors as the benchmark KSE-100 Index shed over 3,900 points during the intra-day trading on Monday. At 3:25pm, the benchmark index was hovering at 116,113.50 level, a decrease of 3,909.73 points or 3.26%. 'Stocks in Pakistan open with a fall of 1700 points or 1.4% amid ongoing Iran-related tension,' Mohammed Sohail, CEO of Topline Securities, said in a note. Across-the-board selling pressure was observed, especially in key sectors including automobile assemblers, oil and gas exploration companies, OMCs, power generation and commercial banks. Index-heavy stocks, including OGDC, PPL, POL, HUBCO, and PSO, traded in the red. During the previous week, the PSX endured turbulence as a combination of rising geopolitical tensions in the Middle East, volatile international commodity prices, and mixed domestic economic indicators rattled investor sentiment. The benchmark KSE-100 Index remained in sharp retreat from its recent highs. On a week-on-week basis, the benchmark settled at 120,023.23 points, reflecting a 1.7% decline compared to the previous week's close at 122,143.57 points. Internationally, shares slipped in Asia on Monday and oil prices briefly hit five-month highs as investors anxiously waited to see if Iran would retaliate against US attacks on its nuclear sites, with resulting risks to global activity and inflation. Early moves were contained, with the dollar getting only a minor safe-haven bid and no sign of panic selling across markets. Oil prices were up around 2.8%, but off their initial peaks. Optimists are hoping Iran may back down now that its nuclear ambitions have been curtailed, or that regime change might bring a less hostile government to power there. Stocks slide, oil and gold jump after Israel strikes Iran One key factor will be access through the Strait of Hormuz, which is only about 33 km (21 miles) wide at its narrowest point and through which around a quarter of global oil trade and 20% of liquefied natural gas supply passes. For now, Brent was up a relatively restrained 2.7% at $79.12 a barrel, while U.S. crude rose 2.8% to $75.98. Elsewhere in commodity markets, gold edged down 0.1% to $3,363 an ounce. Share markets were proving resilient so far, with S&P 500 futures off a moderate 0.5% and Nasdaq futures down 0.6%. MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.5, and Japan's Nikkei eased 0.9%. Europe and Japan are heavily reliant on imported oil and LNG, whereas the United States is a net exporter. This is an intra-day update
