Is the major shareholder in Hubco about to offload all of its holding?

In the exacerbating electric power supply conditions throughout the country, another major blow is about to hit the power generation sector. Xenal Industries of Saudi Arabia, the group which hold 140 million shares in Hubco (Hub Power Company), is expected to withdraw all of its shares from the power company.

According to some unofficial sources, Xenal is understood to be in some early stages of negotiations with a group of influential banks to sell its entire stake at Hubco, the largest IPP (Independent Power Plant) of the country, at a discount to the market price.

“The size of the deal works out to $65 million ($60 million if executed ex-dividend),” said Nauman Khan, analyst at stock brokerage firm Topline Securities.

There has been no confirmation about the share offloading from Xenal itself but such rumours are engulfing the market for the past three days that the company is about to sale out its investment in Hubco. Zafar Subhani, the CEO at Hubco, was asked about the rumours on Thursday evening and he remained aloof from the matter by stating that it’s not the company policy to comment on any rumours.

A source privy to the deal has claimed that the deal has already been finalized between the two concerned parties and he had even taken a glance at the agreement. He has asserted the size of the transaction to be $60 million, with shares being sold at a discount to the market price.

Xenal Industries is well known around the globe for its diversified portfolio in energy, petrochemical, constructions/real estate and infrastructure development sector and its withdrawal from Hubco will certainly be a major blow to the exacerbating conditions of the foreign portfolio investment in Pakistan.

It is also grumbled by some analyst that Xenal has aggressively sold its Hubco holding in order to re-buy it once 140 million shares flood the Karachi Stock Exchange (KSE). The dollar denomination also provides an automatic hedge to the company as compared to the Pak rupee devaluation, which has already fallen by 1.6 per cent against US dollar in one year’s time.