Pakistan Cancels Share Sale

Pakistan Cancels Share SalePakistan Cancels Share Sale

Pakistan scrapped its biggest share sale in eight years as a slump in crude oil prices and political opposition to reducing a government stake in oil explorer Oil and Gas Development Co. damped investor interest.

The government received bids for 52 percent of the 311 million shares Oil and Gas offered at a floor price of 216 rupees each, the finance ministry told Bloomberg on Sunday.

The sale, through a book-building process that began on Nov. 5, would have raised 67.2 billion rupees ($656 million) at the minimum price.  Pakistan is seeking to raise funds through the sale of government holdings in companies to meet conditions attached to a $6.6 billion International Monetary Fund loan. The Privatization Commission sold shares in Pakistan Petroleum Ltd., the second-biggest fuel explorer, and United Bank Ltd. in June.

Oil has slumped into a bear market amid signs that global supply growth is outpacing consumption with West Texas Intermediate tumbling 20 percent this year.

“Oil prices came down by the time of the offer,” Mohammad Zubair, chairman of Privatization Commission said. “We would have gone forward if the offer was fully subscribed.”

Pakistan opposition leader Imran Khan’s protests against Prime Minister Nawaz Sharif’s government since mid-August and a court case filed by the provincial government of Khyber-Pakhtunkhwa also led to low investor response, the ministry said.

“It’s a good decision to postpone” the sale, said Mohammed Sohail, chief executive of Topline Securities Pakistan Ltd. “Maybe the government can fetch a better price once global oil prices recover.”

Shares of Oil and Gas, the nation’s largest explorer, slumped to a 17-month low of 221.60 rupees on Nov. 6 after the floor price was announced.

The company is the third-worst performer on the benchmark KSE100 Index in the past three months, according to data compiled by Bloomberg.