HBFC sell-off held in abeyance

KARACHI: Privatisation of the House Building Finance Company Limited (HBFC) has been in abeyance as the Prime Minister Secretariat has sought report from Federal Finance Secretary in this respect. A seven-member delegation of the joint action committee of HBFC met Ahmad Mushtaba Gilani, sibling of the PM and also the chief of POMP office, Multan region, to discuss the matter.

A delegation, led by Ghulam Shabir, a senior committee member, highlighted core issues pertaining to the privatisation of HBFC and has also expressed resentment in this connection. Talking to Business Recorder on Tuesday, Shabir said they discussed several problems as the fate of the decision, which would deprive the needy of having their own shelters for their families.

They requested Ahmad to ensure that the decision to privatise HBFC be reversed. He said the delegation also pointed out that HBFC has so far disbursed around Rs 18 billion to the middle and lower income groups for construction of around 0.7 million housing units. He said the delegation has brought to his notice that the decision of privatisation was aimed at earning huge amount as commission.

He said that Ahmad has ensured the delegation that positive measures would be taken to facilitate the masses because it is the prime objective of PPP government to provide shelters to everyone. He said the representation against privatisation of HBFC, consisting of suggestions for making the company a commercially strong and socially responsible institution was moved to the PM Secretariat for consideration.

Shabir further said the PM Secretariat has recently issued a letter to the Finance Secretary in response to the representation, asking him to submit report in consultation with HBFC, shortly. It is worth mentioning that the issue was in limelight when the debt equity swap of two overdue instalments of SBP credit line swelled to Rs 3.2 billion.

Therefore, HBFC, with the consent of Ministry of Finance (MOF), took IFC technical assistance for preparation of a Business and Capacity building plan in 2005-06. IFC after an international bidding appointed Canadian Mortgage and Housing Corporation (CMHC) to undertake the exercise.

CMHC after a detailed study of Pakistan's mortgage market and due diligence of HBFC prepared and submitted a detailed Business Plan in February 2007. CMHC recommended for financial restructuring and financial support to be provided by the government and had also suggested providing fund based support for its restructuring and privatisation. Therefore, the concerned authority has decided to float some 41 percent (282 million shares) in the market.

The corporation has planned to offer pre-IPO to International Finance Corporation (IFC) of 69 million shares (Rs 0.68 billion), which would be 10 percent of total number of shares, while around 179 million shares, amounting Rs 1.79 billion, some 26 percent of total shareholding, would be divested to strategic investors and remaining 5 percent shareholding, around 34 million shares, would be offered to HBFC employees.

Courtesy: Business Recorder

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