Unilever Pakistan: delisting does not mean disinterest

Stakeholders have varying views on the delisting of Unilever Pakistan. Two foreign funds that collectively hold almost 10 percent of the Companys shares are trying to mobilise the Securities and Exchange Commission and the Karachi Stock Exchange against the proposed delisting.
However interactions with both funds have so far not clarified their stance, as they appear to be lobbying for a higher buyback price on one hand, while calling for a stay on the delisting on the other.
The delisting does not bar existing shareholders from holding on to their share in the Companys equity. The buyback offer is an option, which minority shareholders may or may not choose to exercise. But mutual funds are usually hindered by their own constitutions, which mandate investments be limited only to listed companies.
The principal shareholders of Unilever Pakistan are making a decision based on commercial considerations and no one can stop them from doing so. The regulator can critically evaluate the pricing and other aspects and recommend changes as it deems fit; which is what the SECP and KSE are doing.
On the request of SECP, the KSE has incorporated a Committee to evaluate the proposed delisting of Unilever Pakistan in light of resentment of minority shareholders. The Committee is going to look at the price offered by Unilever and may recommend a change in rules to incorporate the vote of minority shareholders (based on free float) for future transactions. But even such changes are introduced; this deal will likely remain unaffected.
Simply put, the delisting of Unilever Pakistan appears inevitable at this point.
Many other questions have also arisen regarding the proposed delisting: why is Unilever taking this step and how will it impact the local equity markets?
Sources close to the Company revealed that the decision is in line with Unilevers global strategy of consolidating its operations in Asia and Africa. By delisting its various companies in these regions, the Company will be able to lower its cost of capital. Additionally, the silent minority is not adding any value to the Company, so Unilever will not lose much by buying back their shareholdings.
In light of this rationale, the delisting of Unilever Pakistan is not likely to have a significant impact on broader market or on the sentiments of investors. Instead the move should be seen as a strong realisation at Unilever that Pakistan is a market with huge potential where further expansion is warranted.