Pakistan state oil giant set for float on London stock market

http://www.thebusinessonline.com/

Pakistan state oil giant set for float on London stock market

By Richard Orange

20 August 2006


PAKISTAN’s state oil giant is preparing to raise up to $1.5bn (£800m, E1.2bn) on the London Stock Exchange (LSE) in a flotation that could value the company at more than $10bn. Oil and Gas Development Company (OGDC) is likely to announce its plans to the LSE within the next month, The Business understands.

It last week hired public relations company Capital MSL, a division of Publicis, to work alongside its advisers Citigroup and Goldman Sachs.

OGDC is the latest national oil company planning to float in London. Russian state oil giant Rosneft raised $10.6bn in London in July. OGDC will compete neck and neck with Kazakhstan’s Kazmunaigas, which has hired ABN Amro and Credit Suisse to manage a London listing in the coming months. Croatia’s national oil company INA has hired Merrill Lynch to bring it a UK listing – also by the end of this year.

OGDC has gas reserves of more than nine trillion cubic feet, with attractive exploration prospects. A City source said: “Everyone knows this is going to be an incredibly hard sell.

“This is a company based in a fundamentalist, anti-western country, loosely held together by a military dictator. They’ve got huge gas reserves, but most of them are in Baluchistan.” Pakistan is still fighting a long-running, low-level civil war against separatists in Baluchistan.

Pakistani privatisation minister Zahid Hamid revealed earlier this month that he had pitched the share sale to US and UK investors. The Pakistan government is aiming to float off 15% of OGDC is part of an ambitious privatisation programme aimed at cutting $35bn in debt.

The Business understands that at least 10% of the company will be sold on the London market, given the greater regulatory obstacles in the US.

Two years ago the Pakistan government hired Merrill Lynch to to sell strategic stake in OGDC to a western oil company, but the sale was eventually pulled in favour of a share offering.

I wonder what the underwritting costs will be. Or whether anyone will even want to underwrite such a risky venture

pakistani companies should have been big multinationals by now, if habib bank carried on its growth it had in the 60s it would have been ahead of HSBC and mcb was growing very fast too once, PTCL, PSO, MCB and Habib bank all should have been big multinationals by now but have missed the bus and let other companies go past them.