KARACHI, March 13: The Privatization Commission (PC) on Wednesday invited Expressions of Interest (EoIs) for sale of ‘management rights’ in six of the 26 mutual funds controlled and managed by the Investment Corporation of Pakistan (ICP).

According to the privatization plans of the government, the management rights in both ICP and the National Investment Trust (NIT), are to be sold by the end of the current financial year to end-June 2002. While the four prospective bidders for controlling stake in NIT: ABAMCO, Arif Habib Securities, PICIC and First Habib Modaraba, have already conducted the ‘due diligence’ exercise and are waiting for the next phase in the process, the government has turned its attention also to the ICP, giving less than a month — up to April 6, for the ‘reputable international and local parties (participating solely or as part of a consortium) to submit the EoIs, by April 6.

NIT is Pakistan’s single largest investment institution with total of Rs18.45 billion under management and 60 per cent market share of the country’s mutual fund industry. The two important issues relating to NIT’s privatization include the Rs12 billion pending redemption request of banks and financial institutions and the significant shareholding that it has in scores of listed companies, which has enabled NIT to place nominees on those boards.

ICP manges and controls as many as 26 mutual funds with aggregate paid-up capital of Rs3.14 billion. The market capitalization of portfolio of all funds taken together amounted to Rs2.38 billion at January 31, 2002, while the cost of investments was Rs2.80 billion and the market value of the portfolio worked out at a considerable premium at Rs4.37 billion.

ICP has been a major institutional player in the stock market accounting for nearly 10-15 per cent of the available floating stock. It also offered certain other services including bridge financing, underwriting of issues and facilities for investors to open and operate discretionary and non discretionary investment accounts.

All 26 funds managed by ICP have since long continued to quote at the stock market at discounts to their Net Asset Value (NAVs). There is hardly any trading in the ICP stocks, which Tariq Iqbal Khan — who heads both NIT and ICP — attributes to the investors penchant to hold on to their stake because of high returns.

Privatization Commission has decided to sell not all of the ICP mutual funds in one go, but in piecemeal. And in selection of the six funds now on offer, the Commission appears to have taken the middle-of-the-road approach. The funds that have now been placed on the auction block neither make up the best nor the worst of the lot. The Commission has retained the 9th Fund that bears the highest market price tag of around Rs23 with market capitalization of its portfolio also leading the rest at Rs116 million. Investors have received the highest payout on the 9th Fund — at 50 per cent for each of the previous two years and at 60 per cent for 2001.

But while the Commission has seen it wiser not to sell the leaders, it also has been loathe to gamble with the laggards. Thus, the 21st, 23rd, 24th and 25th funds — all those that do not paint a pretty picture in respect of NAVs and market prices — have been saved for another day.