Monday, July 4, 2016

Multinationals Snapping Up Pakistani Companies For Growth

Two multinational giants acquired 2 Pakistani companies in just the last week alone as part of their growth strategy to establish presence in Pakistan.

Dutch dairy giant FrieslandCampina acquired 51 % of Karachi-based Engro Foods Limited, the second largest dairy producer in Pakistan. In the same week, Turkey's Arcelik announced purchase of Dawlance, Pakistan's market-leading home appliance maker.  Both cited opportunity for double-digit growth in the emerging market as the main reason for their acquisitions.

Pakistan's Emerging Market Upgrade:

Earlier in June, Morgan Stanley announced its decision that Pakistan's MSCI shares index will be upgraded from frontier to emerging market status. Pakistan's Karachi Stock Exchange KSE100 Index has rallied 14% in 2016, making it Asia's best performing market so far this year in anticipation of the MSCI announcement.

Pakistan Dairy Market:

Pakistan is the third largest milk-manufacturing country in the world, with 38 billion liters on an annual basis, according to Retail Detail of Europe.  FrieslandCampina wants to take advantage of the shift to packaged dairy products in Pakistan: not even 10 % of milk consumption comes from processed and packaged milk in Pakistan, but FrieslandCampina expects that to change in the near future.

“Thanks to this well-organized and very successful company, we have obtained a strong position in the Pakistani dairy market. A growing middle class is switching to processed and packaged milk in Pakistan and Engro Foods provides a platform to build on. This acquisition will contribute to the value proposition we want to give our member dairy manufacturers. We will also help develop the agricultural industry in Pakistan with our extensive knowledge on the dairy manufacturing process and thanks to our Dairy Development Programme", CEO Roelof Joosten said.

To tap into the Pakistani market, FrieslandCampina is buying 51% of Engro Foods at an estimated price of $448 million, a securities filing said on Monday. Topline Securities said Engro Corporation will generate cash of around Rs. 47 billion, part of which will most likely be invested in energy-related projects with a higher rate of return, according to a report in  Pakistan's Express Tribune newspaper.

Home Appliance Demand in Pakistan:

Pakistan's $3 billion home appliance market is experiencing double digit annual growth. It has attracted the attention of China's Haier, a multinational giant that recently acquired American General Electric's home appliance business.

Haier has 8 industrial complexes, two of which are foreign--one in the United States, and one in Pakistan,  according to  Xiaofei Li, the author of "China's Outward Foreign Investment: A Political Perspective". In these Special Economic Zones, Haier does localization to suit the needs of the consumers.  For Pakistani market, Haier especially designed a washer that can hold 15 long gowns at one time. There are many more such Special Economic Zones envisaged as part of the CPEC (China-Pakistan Economic Corridor).  It will be essentially an industrial corridor spanning almost the entire length of the country from the Arabia sea coast to the Karakorams where it enters China via the Karakoram Highway (KKH), the word's highest paved road.

Pakistan's privately-held Dawlance is also a major player in Pakistan's home appliance market. It is Pakistan's leading refrigerator and microwave brand, No. 2 air conditioners and No. 3 in the laundry category. In  2015, it reported $221 million in revenue and $45 million in EBITDA (earnings before interest, taxes, depreciation and amortization), according to Nikkei Asian Review.


“Pakistan is the sixth most populous country in the world with a population of 200 million people. In particular its young population and increasingly growing economy make it an enticing prospect as a market in the region. With the acquisition of Dawlance in Pakistan, Arçelik will employ a total workforce of 30,000 worldwide and will have a global production base of 18 manufacturing facilities including Turkey, Romania, Russia, China, South Africa and Thailand. Our acquisition is also a powerful example of south-south cooperation, representing a technology and know-how transfer between developing countries,” said Fatih Ebiçlioğlu, the head of the Consumer Durables Group of Koç Holding that controls Arcelik, according to Turkey's Hurriyet Daily News.

Summary:

Smart money is starting to flow into Pakistan again as the world recognizes the country's tremendous economic potential as a growing emerging market.  Investors and businesses are looking to profit from expanding Pakistani economy backed by growing middle class consumption and rising Chinese investments in energy and infrastructure.

Related Links:

Haq's Musings

China's Haier Expands Manufacturing in Pakistan

Japanese Multinationals Rank Pakistan Among Top Growth Markets

Chinese FDI in Pakistan For CPEC Projects

Pakistan Included in MSCI Emerging Market Index

Pakistan's Middle Class Grows to 55% of Population

China-Pakistan Industrial Corridor (CPEC)

Pakistan Launches $8.2 Billion Rail Upgrade Project

24 comments:

Anonymous said...

Companies being bought by foreign companies is nothing to celebrate.

You think Indians will celebrate if Infosys etc are bought by IBM ?

Remember during the Satyam scandal they made it clear that it would merge with other Indian IT companies(in the event Tech Mahindra) IBM,Accenture,Atos etc were explicitly told to look elsewhere.

Riaz Haq said...

Anon: "Companies being bought by foreign companies is nothing to celebrate."

So why is India now allowing 100% FDI in all sectors of the economy?

"Of particular interest to foreign investors would be defense, civil aviation and pharmaceutical sectors, all of which now allow 100 percent foreign investment. Before now, FDI in the defense sector was capped at 49 percent; now, 100 percent FDI will be allowed by the government on a case-specific basis, when “it is likely to result in access to modern and ‘state-of-art’ technology in the country.” The policy is also applicable to the manufacturing of small arms and ammunitions, which was earlier outside the purview of the policy."

http://www.ibtimes.com/india-opens-economy-further-allows-100-foreign-direct-investment-various-sectors-2384247


Anon: " Remember during the Satyam scandal they made it clear that it would merge with other Indian IT companies(in the event Tech Mahindra) IBM,Accenture,Atos etc were explicitly told to look elsewhere."

Do you think foreign companies see much value in body shop businesses like Infosys relying on human trafficking of code coolies with H1B visas? They can directly hire as many code coolies as they want without buying Indian body shops.

http://www.riazhaq.com/2016/04/india-files-h1b-visa-complaint-against.html

Chet said...

Good news for Pakistan that more foreign companies are investing in Pakistan by buying local companies. The multi-nationals will bring much needed expertise and marketing know how. If Pakistan would just liberalize the economy and reduce regulatory and legal hurdles, foreign investment will flood in.

With 200 million people, and sitting astride a key geo-strategic area, Pakistan cannot be ignored.

Riaz Haq said...

#Pakistan Investors Shrug Off Corruption Allegations Against #NawazSharif #PMLN #PanamaPapers http://blogs.barrons.com/emergingmarketsdaily/2016/07/05/pakistan-stocks-shrug-off-corruption-allegations/ … via @barronsonline

Allegations of government malfeasance in Pakistan are unlikely to shorten the tenure of Prime Minister Muhammad Nawaz Sharif, according to Eurasia Group.

Despite corruption charges that surfaced in the Panama Papers, with support from the opposition in Pakistan, the small Global X Pakistan Exchange-traded fund (PAK) is up about 15% this year, reflecting MSCI’s recent announcement that it will add the country to the MSCI Emerging Market index. The fund was down 1% in recent trading, while the iShares MSCI Emerging Markets ETF (EEM) was down 2% and the iShares MSCI Frontier 100 ETF (FM) was down 1.3%.

Analyst Christopher Cannell writes:

“Prime Minister Nawaz Sharif of the ruling Pakistan Muslim League – Nawaz party (PML-N) will remain in London until … the end of the month of Ramazan, recovering from heart surgery even as he faces fresh corruption allegations stemming from the Panama Papers. Yet while the mounting allegations will weaken Sharif’s political position at a time when he was not present to defend himself, he will continue to lead the PML-N and early elections are highly unlikely. … The PML-N is likely to win the 2018 election with a reduced mandate …

The contest to replace him will be complicated by corruption allegations against many main contenders within the PML-N, sparking worsening political instability after the election … Sharif’s … approval rating has experienced a non-negligible drop from 75% in October 2015 to 54% in June 2016, the only poll conducted after the leaks. However, Sharif’s political standing is grounded on the PML-N’s strength in parliament, the tacit support of the Army, and the $46 billion China Pakistan Economic Corridor – a set of infrastructure projects critical to Pakistan’s future economic performance—negotiated by Sharif and his PML-N. The PML-N remains the largest party in the lower house, and would not pass a motion of no-confidence in the PM, and it retains control of its Punjab heartland, the most populous area of Pakistan.

… Sharif’s heir apparent is his daughter Maryam Nawaz Sharif, currently the party’s unofficial social media coordinator. She is also reportedly increasingly involved in policy and party meetings while her father convalesces in London, despite having no formal political position. However, she has been directly named in the Panama Papers … “

There are a number of stories on Pakistan opposition leader Syed Khursheed Shah in Pakistan Today. Also see our posts How Do you Define “Emerging”? Pakistan Counts The Ways, MSCI Jazzed On Argentina & Pakistan, Not Nigeria Or China and How Panama Papers Could Play Out In EM.

Riaz Haq said...

#IMF revises up #Pakistan's 2016/2017 growth forecast to 5 percent http://reut.rs/29mzJad via @ReutersIndia
http://in.reuters.com/article/pakistan-imf-idINKCN0ZL1JH

The International Monetary Fund (IMF) on Tuesday increased to 5 percent its forecast for Pakistan's growth in the fiscal year to June 2017, from a previous estimate of 4.7 percent, citing China's plans to invest in road and energy infrastructure.

In September, Pakistan will end a three-year $6.7-billion financial assistance programme from the IMF, after the economy recovered from a series of financial crises, with growth at an eight-year high and increased foreign exchange reserves.

Fund officials say Pakistan has met all performance criteria for the assistance programme but urged Islamabad to keep tackling structural reforms to further increase growth and make it more inclusive.

"Growth is expected to strengthen to 5 percent in FY 2016/17, supported in part by an expected pick-up of investment related to the China Pakistan Economic Corridor (CPEC)," the fund said in a report.

The $46-billion CPEC project will focus on road building and energy infrastructure to end chronic power shortages in Pakistan. A highway is expected to link Western China with the port of Gwadar port on the Arabian Sea.

Fund officials say Pakistan's economy is likely to have grown 4.7 percent in the fiscal year to June 2016, a touch higher than their May estimate of 4.5 percent.

"Inflation is expected to remain contained at 5.2 percent in FY 2016/17, well-anchored by prudent monetary policy," the IMF added.

The IMF said Pakistan had also sought a four-week extension to the loan programme from Sept 3 to Sept 30 to "allow sufficient time to conduct discussions for the final review". It added Pakistan was in strong position to repay the IMF.

"Pakistan’s financing needs are fully covered for the remainder of the program and the country’s capacity to repay the Fund remains strong owing to supportive macroeconomic policies, resilient remittances inflows, and increasing foreign exchange reserves," the IMF said.

Riaz Haq said...

#China Grants $260m for #Gwadar International Airport in #Pakistan #CPEC http://crss.pk/story/china-grants-260m-for-gwadar-airport/ …

China is granting Pakistan some $260 million for the construction of the Gwadar International Airport on the Arabian Sea, national media reported Tuesday.
Government officials shared this information with the Parliamentary Committee on China-Pakistan Economic Corridor (CPEC) in a recent meeting at Islamabad, the daily Express Tribune said. The entire amount of $ 260 million is a grant from the Chinese government, the parliamentarians were informed. (http://tribune.com.pk/story/1136476/infrastructure-gwadar-airport-cost-260m/)
Gwadar, also being developed as a deep-sea port, is the culmination of the CPEC – the first initiative under China’s One Belt One Road (OBOR) trade connectivity plans – that will connect Kashgar in west Chinese province of Xinjiang through a nearly 3000 km route.
Gwadar is located in the ethnic Baloch part of the southwestern Balochistan province, where a low-intensity Baloch nationalist movement has been stoking unrest.
This airport would be able to handle the largest of passenger planes including the A380 Air Bus and Boeing 747-400.
Additionally, the Chinese government has given another grant of $10 million for the construction of the Pakistan-China Vocational and Technical Training Institute to help locals acquire skills.
These grants are part of $ 46 billion infrastructure investment and communications’ development plan under the CPEC. It includes construction of highways, industrial zones, and energy projects across Pakistan.

Qasim said...

$260 million is like a gift or does it need to payback like a loan in 5 years?? Also same for the 46 billion some say no karz some say high interest. It is like nobody knows

Riaz Haq said...

Qasim: "$260 million is like a gift or does it need to payback like a loan in 5 years?? Also same for the 46 billion some say no karz some say high interest. It is like nobody knows"

My research so far tells me there are three kinds of financing of CPEC:


1. Grants like the $260 million for Gwadar International Airport.

http://crss.pk/story/china-grants-260m-for-gwadar-airport/

2. Concessionary loans to Pakistani government from China-led Asian Infrastructure Investment Bank along with Asian Development Bank and World Bank.

http://tribune.com.pk/story/1096762/cpec-eastern-alignment-pakistan-china-ink-agreements-worth-4-2b/

http://www.brecorder.com/market-data/stocks-a-bonds/0/1223449/

3. Chinese ExIm (Export-Import) Bank loans to Chinese contractors who will do energy projects on Build-Operate-Transfer (BOT) basis.

. http://www.ndtv.com/world-news/china-to-invest-8-5-billion-to-upgrade-pakistans-rail-network-build-gas-pipeline-report-1417247

http://www.bakermckenzie.com/en/newsroom/2016/05/export-import-bank-of-china-launches-mega/


Jay said...

$260 million for the airport is high. Similar airports in terms of cargo and passenger traffic costs lot less. Cochin and Hyderabad airports & infrastructure related costs were around 50 million each!

Riaz Haq said...

Jay: "$260 million for the airport is high. Similar airports in terms of cargo and passenger traffic costs lot less. Cochin and Hyderabad airports & infrastructure related costs were around 50 million each! "

Not all airpots are alike. Cost depends on a number of factors: Number and length of runways, passenger terminals, cargo terminals, passenger traffic, cargo volume, etc etc.

China and Pakistan see Gwadar as Hong Kong West as trade hub in size and scope.

http://www.riazhaq.com/2015/05/will-pakistans-gwadar-become-hong-kong.html


Check out the following link on world's largest airport projects:

http://centreforaviation.com/analysis/the-worlds-biggest-airport-construction-projects-2015-total-value-over-usd500-billion-part-1-205200

Jay said...

Sir, you are right about all airports are different. The HK comparison is understood but the land acquisition, cost analysis, foundation specs are not at the same level as HK - HK being a dense metro.

I would be interested in the feasibility studies and appraisment specs and cost of Gwadar airport. It just seems too high

Riaz Haq said...

Jay: "The HK comparison is understood but the land acquisition, cost analysis, foundation specs are not at the same level as HK - HK being a dense metro."

Gwadar Airport is only $260 million, not several billion dollars as some of the biggest airport projects in China.

Riaz Haq said...

#Pakistan saw 23% growth in airline passengers in 2015; #Gwadar airport growth fastest at 73% #CPEC http://www.anna.aero/2015/09/02/pakistan-sees-a-rise-in-airline-seat-capacity-of-23/ … via @annaaero

Pakistan’s commercial airports have seen major growth in capacity in the past 12 months, as S15 seat capacity is showing a rise of 23%. Of all the airports in Pakistan, the one that is recording the greatest growth in capacity is Gwadar (13th largest in S15), which is showing an increase in capacity of 73%. A total of eight airports are recording a growth rate over the past 12 months that is greater than 60%, with four of these airports being in the top 12 (highlighted in light green). Only one airport is showing a decline in capacity when compared with S14, Skardu. The 14th largest airport in 2015 was the 11th biggest last year. However, the facility has witnessed a decline in seat capacity of 14% according to OAG Schedules Analyser. In the top 12, the airport order pretty much remains constant, with Multan (+64%), Quetta (+62%) and Faisalabad (+61%) all climbing one place as a result of all of them seeing a growth of over 60%. Turbat is a new airport to the top 12 (13th in S14) as a result of Skardu’s capacity decrease.

After seeing a rise in capacity of nearly 26%, the domestic market is the largest in Pakistan. The country market that is recording the best growth in the top 12 is Sri Lanka. The country pair is served by two routes to Colombo from Karachi and Lahore, with the latter only being launched in November last year with a twice-weekly service operated by Mihin Lanka. Services to Karachi have seen an increase in capacity of 11%, a sector flown by SriLankan Airlines. Of the country markets in the top 12, the only one to show a decline in capacity is Kuwait. In total there are three connections between Kuwait City and Pakistan for S15 (same as in S14), Lahore (-6%), Islamabad (+1%) and Sialkot (-23%). Surprisingly Karachi, the largest airport in Pakistan relating to seat capacity, does not have a direct service to Kuwait.

Over the past 12 months, Turkish Airlines has grown seat capacity out of Pakistan by 38%, beating the MEB3 carriers of Emirates (+13%), Qatar Airways (+28%) and Etihad Airways (+18%). What should also be noted is that Emirates’ sister airline, flydubai (highlighted in light green), has now overtaken Etihad Airways in relation to the monthly seat capacity on offer by both airlines in S15, helped by the carrier reporting a growth in capacity of 66%, and climbing from 12th spot in 2014 to eighth in 2015 in relation to Pakistan’s top 12 airlines. This has been helped in part by the airline recently launching services from Dubai to Faisalabad. Nonetheless the number one out of Pakistan remains the country’s national carrier, Pakistan International Airlines. The airline has reported a growth in capacity when compared to the same time period of last year of 25%. None of the airlines in the top 12 are reporting seat capacity reductions in S15. However, Air Indus is showing a consistent pattern with 0% growth and offering the same amount of seats as S14, but growth from Airblue means that the airline drops to fifth in S15 from fourth in last year.

Riaz Haq said...

#Pakistan #textile company to enter fast growing #dairy business

http://tribune.com.pk/story/1137049/new-path-textile-firm-enters-dairy-business-rs2b-investment/

A renowned textile company has made forays into the dairy business and intends to introduce a new milk brand next year in a bid to grab a slice of the pie in the growing but still underdeveloped sector.

“Interloop Limited, one of the world’s largest socks manufacturer, has poured Rs2 billion into the dairy business and set up a new company named Interloop Dairies Limited. It is going to launch its milk brand next year,” said Navid Fazil, Chief Executive Officer of Interloop Dairies, in an interview with The Express Tribune.

This is happening at a time when Dutch dairy company FrieslandCampina signed an agreement with Engro Corporation for the acquisition of 51% stake in the latter’s subsidiary Engro Foods for $448 million.

Pakistan is said to be the fourth largest milk producer in the world, but only 10% of the milk produced is sold in packages. The packaged milk market is dominated by a couple of players.


Riaz Haq said...

"#India's Growing At 5-6%, Less Than #Modi Government Claims" "#Pakistan's prospects bright" Morgan Stanley's Sharma

http://www.huffingtonpost.in/prabha-chandran/exclusive-india-will-rise_b_10750458.html … via @HuffPostIndia

Sharma says: "I think India is growing at a pace between 5 and 6%, or about two points lower than the government claims. That is a huge difference -- but these days a pace better than 5% is actually quite good, even for a relatively lower income country. At a time when slower population growth, high debts, falling growth in global trade and capital flows, and other forces are slowing the global economy, every class of nations needs to lower its expectations. It may be a long time before we see another emerging nation post growth in excess of 7-8% in this new era. The risk for India is that the state will try to push growth faster than is possible or practical, in this slow growth era"


"Sri Lanka, Pakistan and Bangladesh all have bright prospects going forward, with credit growth under control, strong working-age population growth, inflation in check..."

Riaz Haq said...

You can make 3 times more money by betting on stocks in #Pakistan (18% YTD) than in #India (6%) - The Economic Times

http://economictimes.indiatimes.com/markets/stocks/news/you-can-make-3-times-more-money-by-betting-on-stocks-in-pakistan-than-in-india/articleshow/53190672.cms

At a time when the world has turned its focus on India, its neighbour Pakistan is running away with all the honours in financial markets.

Data compiled by ETMarkets.com shows you could have made three times more money by betting on the Karachi Stock Exchange's KSE30 index than on Bombay Stock Exchange's Sensex.

The KSE30 has given 18 per cent returns so far this year through July 12, making it the best-performing Asian index. Compared with that, the BSE Sensex has given just 6% ..


While, IMF has marked India as the brightest spot in the global economy, it has also been raising its forecast for Pakistan. In May, IMF raised Pakistan's GDP forecast for FY2017 to 5 per cent from 4.7 per cent.

"Growth is expected to strengthen to 5 per cent in FY 2016-17, supported in part by an expected pickup of investment related to CPEC ..


Not only that. The London-based BMI Research, a financial market analysis firm, has rated the country among the next big drivers of global economic growth. Others on the list are Bangladesh, Ethiopia, Egypt, Kenya, Indonesia, Myanmar, Nigeria, Philippines and Vietnam.

Jawaid E. said...

One of the issue for a retail US investor is how to invest in this Market. Outside of PAK ETF which is very very small not much is available.

Maybe you can educate us how?

Riaz Haq said...

Jawaid: "One of the issue for a retail US investor is how to invest in this Market. Outside of PAK ETF which is very very small not much is available. Maybe you can educate us how?"

PAK ETF is pure play. Other index and mutual funds have various weights in Pakistani stocks.

Examples:

the iShares MSCI Frontier Market ETF (FM) and the iShares MSCI Emerging Markets ETF (EEM)

http://www.barrons.com/articles/pakistans-enormous-long-term-growth-potential-1461386993

There are also mutual funds like Franklin Templeton Asia Growth Fund

http://www.franklintempletoncareers.com/downloadsServlet?docid=hansupjc


Salim said...

Emerging market funds took a big hit due to the failed coup in Turkey.
It is very risky to just invest in the KSE - no foreign investment firm does that - it becomes a moot point to talk about betting on the KSE since it is not a viable option. Hopefully your blog followers are not putting their life savings in such areas

Riaz Haq said...

Increase in Pakistan’s energy consumption depicts higher economic activities

Pakistan's primary energy consumption increased by 5.9 percent to 78.2 million ton oil equivalent (MTOE) in 2015, compared with 73.2MTOE in 2014 depicting higher economic activities.

According to the statistical data of British Petroleum on energy use around the world, the primary energy consumption in China grew by 1.12 percent from 2014 to 2015 that has resulted in slowdown in China’s economy. India’s primary energy consumption increased by 5.1 percent during the same period which is lower than that of Pakistan. Indian GDP growth, though highest in the world remains much below the peaks it attained at the start of this decade.

The fuels consumed for producing primary energy show that in 2014, Pakistan consumed 22.8MTOE of oil that increased to 25.2MTOE in 2015. Its natural gas use also increased from 37.7MTOE in 2014 to 39.0MTOE in 2015. The consumption of coal remained the same at 4.7MTOE in both years.

According to the report, electricity consumption in Pakistan increased from 96.2 terawatt-h in 2008 110.0 terawatt-h in 2015. The increase was restricted to 99.3 terawatt-h till 2012; showing cumulative increase of 4 percent only, but in the next three years the consumption cumulatively increased by 10.7 percent of which 2.7 percent increase was in 2015 over 2014. Indian electricity consumption in comparison increased more robustly being 833.4 terawatt-h in 2008 that increased to 1,304.8 terawatt-h in 2015.

---
India produces 45.5MTOE from natural gas, 407.2MTOE from coal that is 100 times more than the primary energy that Pakistan derives from coal. Its hydro electric generation is 8.6MTOE. It derives 15.5MTOE from renewable that is 30 times more than what Pakistan obtains from renewable. The primary energy obtained by China from natural gas is 177.6MTOE, from coal it is a whopping 19,203MTOE. Its hydro electric energy amounts to 254.9MTOE, nuclear 38.6MTOE and renewable 62.7MTOE. The renewable energy extracted by China is equivalent to 60 percent of the total energy produced in Pakistan.

Bangladesh in 2008 consumed only 34.2 terawatt-h electricity that was almost 1/3rd of the power consumption in Pakistan. In 2015 the gap was reduced to 60 percent of the power consumed in Pakistan. Bangladesh is exporting much more than Pakistan despite low power use because it adds high value to its apparel. The power requirement of the garment industry is nominal when compared with spinning, weaving and processing that produce low value-added textiles exported by Pakistan. The electricity consumption in China increased to 5,810 terawatt-h in 2015 compared with 3495 terawatt-h in 2008.

Coal, wind and solar energy are the cheapest source of energy around the world. Wind and solar along with hydro electricity are the cleanest energy fuels. China fulfilled 1,920MTOE of its energy needs from coal, India 388.7MTOE, and Pakistan only 4.7MTOE. Coal use for energy production is confined only to the private sector in Pakistan. Around 3,000MW coal based power plants are expected to be commissioned by 2019 after which share of coal in the energy mix would substantially increase. Wind power consumption in China was 41MTOE in 2015, it was 9.4MTOE in India and only 0.1MTOE in Pakistan. Solar power production in 2015 was 8.9MTOE in China, 1.5MTOE in India and only 0.3MTOE in Pakistan. Pakistan is also on the course to double its hydro electric production to over 16,000MW by the end of 2021.

https://www.thenews.com.pk/print/131885-Increase-in-Pakistans-energy-consumption-depicts-higher-economic-activities

http://www.bp.com/content/dam/bp/pdf/energy-economics/statistical-review-2016/bp-statistical-review-of-world-energy-2016-full-report.pdf

Riaz Haq said...

#Karachi #Pakistan’s #Electric Utility K-Electric Rises After $1.6 Billion #Shanghai Offer. #China http://bloom.bg/2c1QcCc via @markets

Pakistan’s K-Electric Ltd. rose to the highest in more than a year and a half after Shanghai Electric Power Co. said it plans to buy a controlling stake in the power utility valued at $1.6 billion.
China’s state-backed Shanghai Electric Power intends to acquire as much as 18.3 billion shares, representing 66% of K-Electric, according to a notice sent by offer manager Arif Habib Ltd. to the Pakistan Stock Exchange. K-Electric shares rose 1.3 percent to 9.21 rupees after the announcement, the highest since January 2015. Arif Habib rose by the 5 percent limit, the most in a month.
The Chinese company said last week it’s doing preliminary preparation work on acquiring a stake in K-Electric, which serves about 2.2 million customers and employs 11,000 people in Karachi, Pakistan’s coastal commercial capital. Shanghai is vying with Chinese clean-energy group Golden Concord Holdings Ltd., French utility Engie SA and at least one investment fund, people with knowledge of the matter said earlier this month.
Bidders were asked to submit binding offers by the end of this month for Abraaj Group’s 66 percent holding in the Pakistani company, according to the people, who asked not to be identified as the information is private. Pakistan’s government owns another 24 percent stake in K-Electric, according to Bloomberg-compiled data.
Acquiring control of K-Electric would be Shanghai Electric Power’s biggest overseas purchase, surpassing its 2014 deal to buy a $399 million stake in Maltese utility Enemalta Plc, according to data compiled by Bloomberg.

Riaz Haq said...

Abraaj invested $361 million for 50% KESC (renamed K-Electric) stake in 2008. Shanghai is now buying 66% stake for $1.6 billion.
http://www.abraaj.com/images/uploads/newspdfs/EMPEA_case_study_kesc_web_FINAL.PDF

Riaz Haq said...

#China's billions are luring other foreign investors to #Pakistan. #CPEC #MergersAndAcquisitions #FDI http://bloom.bg/2fSiinf via @business

Bloomberg

After years of flat direct foreign investment, it has taken China’s pledges of billions to get overseas companies to start looking beyond Pakistan’s negative headlines on security challenges and power outages.

While investment into Pakistan has been little changed in the three years since Prime Minister Nawaz Sharif was elected, companies including Turkey home appliances maker Arcelik AS and Dutch dairy giant Royal FrieslandCampina NV are making acquisitions in Pakistan.

Along with a military crackdown against militants following a 2014 school massacre and the government’s plans to end power shortages by 2018, it is China’s vote of confidence in the country that has boosted investor confidence. It pledged $46 billion in soft loans and investments in a so-called China-Pakistan Economic Corridor, or CPEC, announced last year.
“Pakistan has turned the tide,” said Mattias Martinsson, the Stockholm-based chief investment officer at Tundra Fonder AB, which holds about $160 million in Pakistani stocks. “The CPEC agreement was probably the trigger for many investors to actively start looking. We all know China does not take short term decisions.”


New power plant projects fueled by Chinese investment are expected to help with Pakistan’s chronic outages and pave the way for investment in other industries. Consumer companies are taking the lead to cater to the world’s sixth largest nation by population.
“If you look at demographic and population, it’s just a great place to be,” said Naz Khan, Chief Financial Officer at Engro Corporation Ltd. whose food subsidiary is being bought by Dutch dairy company FrieslandCampina, which is looking to take a 51 percent stake in a deal valued at about $545 million at the Nov. 4 closing.


Consumer Spending
Consumer spending in Pakistan has increased 83.4 percent in the past five years compared with 48.7 percent in the Asia-Pacific region, according to data by Euromonitor International, a consumer research firm. Its forecasts show Pakistan’s disposable income has more than doubled in six years.
“Its young population, increasingly growing economy, makes it an enticing prospect as a market in the region,” Polat Sen, chief financial officer at Arcelik, said by e-mail. “Pakistan is on the verge of an investment-led growth cycle.”
Arcelik is scheduled to complete its purchase of Pakistan’s home appliance maker Dawlance for $243.2 million this month. It plans to focus on the local market and closely evaluate opportunities in the current export markets of Dawlance, according to Sen.
Pakistan’s government expects the economy to grow at the fastest pace in a decade after completing an International Monetary Fund loan program that averted a balance of payment crisis and boosted foreign exchange reserves to a record level. The economy is expected to grow around five percent annually for the next three years and Arcelik plans to keep its sales growth above that, according to Sen.

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Pakistan’s automobile sector has also attracted interest with Renault entering exclusive negotiations with Ghandhara and Al Futtaim to develop a brand in Pakistan, a spokeswoman said by phone on Nov. 3. Meanwhile, investments are expected to jump to $5 billion in the year starting July from $1.28 billion in the last fiscal year as power plants come on line, Miftah Ismail, chairman of the nation’s Board of Investment, said in an August interview.
“I think you will also see Pakistan moving more toward merchant markets, you know people coming in and start taking risks," Khan said. “ I think this is just the beginning."

Riaz Haq said...

#Pakistan offers great-potential for #Turkish firms investments. #Dawlance #Cocacola #Erdogan #Turkey

http://www.yenisafak.com/en/world/pakistan-offers-great-potential-for-turkish-firms-investments-2566850

Atilla Yerlikaya, the president of Turkey-Pakistan Business Council of External Economic Relations Committee, emphasized Pakistan's economic potential for Turkey, showing a brief glance into the country's economic opportunities.
According to Yerlikaya, during Erdogan's last visit to Pakistan, Erdogan and Pakistani PM Nawaz Sharif came together with businessmen from both countries and called for a closer cooperation to increase bilateral trade volume and investments to a great degree.
He said, ''President Erdogan praised the Koç Group for investing in Pakistan by buying Dawlance co, a prominent white goods producer of Pakistan for $243 million and Anadolu Group for Coca-Cola investment which exceeds $500 million. He cited them as examples of successful economic cooperation between two countries.''

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Highlighting Pakistan's great potential for business, he said, ''Within the context of the Project of China-Pakistan Economic Corridor, Pakistan's energy and logistic infrastructures will be renewed. Considering Pakistan's $270-billon national income, one can easily grasp how a $50-billion investment makes sense. These investments will unlock agricultural and industrial sectors of the country for Turkey."