HUBCO: shifting shareholdings

Hub Power Company Limited (HUBCO) is likely to see its key shareholder and sponsor – Dawood Hercules walk away soon as the latter has been considering offloading its 14.91 percent shareholding in the IPP. So said a recent filing on the PSX.

Dawood Hercules has been a major shareholder of HUBCO since 2012 when the IPP’s initial sponsors Xenel International and National Power International exited from their 12.1 percent and 17.4 percent shareholding, respectively in 2012. At that time, Dawood Hercules Corporation and its affiliates bought most of this give- up shareholding - 16.42 percent stake to be precise.

This is not the only change HUBCO will take on; the IPP is also to divest it 40 percent stake in Thar Energy Limited; it has offered 30 percent stake to Fauji Fertilizer Company Limited (FFCL) and another 10 percent equity interest in the project to the China Machinery Engineering Company (CMEC), the EPC Contractor of TEL.

At the same time, Dawood Hercules exit might not surprise many after it also cleaned its hands off of its fertilizer plant. Dawood Hercules Fertilizer Limited (DHFL) was a wholly-owned subsidiary of Dawood Hercules Corporation. The fertilizer business has been sold to Pakarab Fertilizers.

How will these changes affect HUBCO? According to AKD Securities, though there might be no material impact of the Dawood Hercules divestiture on HUBCO’s operations, there will be a change of titles, which would lead to a change in HUBCO’s chairman. Will this impact the ongoing expansion projects undertaken by HUBCO, especially those that are expected to materialise soon? That needs to be seen. HUBCO is currently aiming for additional capacity with 2x660MW coal power plants in CPHGCL (CPEC project), 330MW in Thar Energy Limited (TEL), and around six percent share in SECMC.