Investing in Pakistan
Pakistan is the world’s 6th most populous country with a population of approximately 200 million. The favorable demographics and urbanization mean the strong commercial potential in the economy. The stable political environment, security law and order, as well as the overall macroeconomic picture has contributed to growth over the last three years. Strong domestic demand, record low interest rates in two decades, new players, corporate investments and technology are building the economy while consistently growing corporate profits is driving economic growth. Fawaz Valiaani, chief executive officer, of Elixir Securities Pakistan (Private) Limited explains why foreign investors should consider Pakistan.

Date

11 Jan 2017

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Q. Why should foreigners invest in Pakistan at this time?

A.  The kind of investment opportunities and returns we find today in Pakistan are more compelling than other development or emerging markets.

Fawaz Valiaani

We continue to be bullish on Pakistan for 2017, looking for growth of 5% year-on year. This strong growth explains the exuberance experienced during the October 2016 Sukuk bond issuance, which saw the issue being doubled to US$1billion. This has also reflected by S&P when it upgraded the long term sovereign credit rating from B- to B on 31 October.

Elixir’s outlook, is predicated on several factors. First, CPEC-related investments of USD 46 Billion are well-underway and will be completed. A large number of projects focus on the investment-starved energy and power sector, which has already reduced blackouts in some big cities from 12 hours daily to six hours.

Second, the authorities need to continue along the economic recovery path set for it by the recently-exited IMF program. The removal of structural impediments mean hitting the 7% growth target by 2018/2019 which is achievable. Third, the political outlook remains stable.

Q. How is Elixir positioned to benefit from these opportunities?

A. I think the best way to benefit from any opportunity is to adapt to change, the world, our region, our market and industry are all in transition so a mindset to focus and be flexible is the main ingredient for achieving success.

Our strategy is to lead growth and change in the industry by capitalizing on the trends and change in business environment.   We have beefed up our human capital, crafted some strategic business alliances with leading Investment Banks/Brokers in the region especially with players in key markets for us such as China.

We are investing in IT, Research, Product Offering, infrastructure and business development initiatives to exploit the opportunities at our doorstep. We have the local knowledge, expertise and connectivity, and to expand our international reach

Q. What is the history of Elixir Securities Pakistan ?

A. Elixir Securities Pakistan (formerly Indosuez W.I. Carr Securities) was Pakistan’s first foreign securities firm established since 1994 and is today one of the leading independent securities brokerage & investment banking firms in Pakistan. We are a Corporate Member of the Pakistan Stock Exchange & Pakistan Mercantile Exchange.

Q. What landmark transactions have Elixir been involved in?

A. To name a few of the equity capital markets (ECM) transactions we have been involved in are:

* the US$1.02  billion  privatisation of Habib Bank Limited, fully  marketed  global  offering and the  largest  ever  equity raising in the history of Asian Frontier Markets and Pakistan, last April 2015;

* the US$44 million privatisation of Allied Bank Limited via a secondary public offering, done in a record 19 working Days, last December 2014;

* the US$388 million accelerated equity offering of United Bank Limited with the IFR Asia awarding “Issuer of  the  Year  2014” accolade to  the  Government of Pakistan  (GOP) and  The  Asset magazine recognizing  it  as the “Pakistan Best Deal of the Year 2014”, last  May 2014; and the

* USD95 million first-ever IPO of Pakistan Petroleum Limited, the country’s second-largest E&P company, last  July 2004.

Q. What are the future opportunities over the next 5 years?

A. In our own industry there are abundant business opportunities in the areas of Equity Capital Markets, M&A, Debt Capital Markets, Islamic Finance, Private Equity, Asset & Wealth Management due to not only higher cross-border investments but strong domestic demand and economic growth.

We see strong development of Pakistan’s capital markets due to the recent MSCI upgrade and entry into the EM Index in May 2017 coupled with the introduction of new products (derivatives such as futures & options, ETFs, forex, commodities, Islamic instruments) and a host of IPOs.

We expect these to result in a substantial increase in trading volumes. The market will also see active M&A deal flow in the next few years due to strong corporate profitability, low interest rates and an increasing strategy of Pakistani businesses to achieve growth through M&As and go global. Because of these we are beefing up our capacity and resources to cater to a substantially higher business turnover.

Q. How has the CPEC become a game changes for growth?

A. The Chinese and Pakistan Governments have entered into and are swiftly executing the USD 46 billion China Pakistan Economic Corridor (CPEC) Program, part of China’s One Belt One Road strategic initiative and a game-change for our country. CPEC is providing an ideal strategic platform for further integration  of the China-Pakistan political and economic relationships.

Date

11 Jan 2017

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