Arif Habib consortium sets up vehicle to complete PIA acquisition

KARACHI: The consortium led by Arif Habib has formed a special purpose vehicle, PIA Equity Ltd (PIAEL), to complete the acquisition of Pakistan International Airlines, Arif Habib Corporation Ltd announced on Thursday.

According to the announcement, the consortium has also submitted a standby letter of credit and a bank guarantee to the Privatisation Commission for the purchase of the remaining 25 per cent shares of Pakistan International Airlines Corporation Ltd (PIACL).

The group has already acquired a 75pc stake in PIACL for Rs135 billion, while the outstanding 25pc stake is priced at Rs45bn. The consortium is expected to take full ownership of the airline within the next 12 months after completion of the payments.

Shareholding structure

PIA Equity Ltd’s shareholding includes Arif Habib Corporation Ltd, Fatima Fertiliser Company Ltd, Lake City Holdings, AKD Group, The City School Group, and Fauji Fertiliser Company Ltd.

AHCL said PIAEL would serve as the main platform for the acquisition and future management of PIACL, bringing institutional investors together under a single structure.

Management transition expected

Management changes and full private control were expected by early next month, which would remove the airline from the oversight of government-appointed board members.

The development marks another step in the privatisation process of the national carrier, with the consortium moving ahead on the financial and corporate arrangements required to complete the transaction.

The report also noted that the airline’s workforce could pose a challenge for the incoming management. Thousands of PIA employees are said to be resistant to full privatisation because of concerns that their jobs may be at risk.

The establishment of the special purpose vehicle formalises the consortium’s structure for taking over and managing the airline as it moves toward full private ownership.