HBFCL privatisation: CCoP allows Privatisation Division to open financial bid

ISLAMABAD: The Cabinet Committee on Privatisation (CCoP) has reportedly allowed Privatisation Division to open financial bid for the privatisation of House Building Finance Corporation Limited (HBFCL), ostensibly to sell it to Pakistan Mortgage Refinance Company (PMRCL) whose financial worth is weaker than assets of HBFCL, well informed sources told Business Recorder.

HBFCL was approved for inclusion in the Privatisation Programme on September 18, 2019 and ratified by the Cabinet on October 01, 2019.

Accordingly, MCB Bank, Elixir Securities & EY Ford Rhodes was appointed as Financial Advisory Consortium (FAC). After completion of due diligence, the FAC submitted Transaction Structure report, which was approved by the CCoP on November 16, 2020 and ratified by the Cabinet on December 1, 2020.

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Subsequently, the following Interested Parties (IPs) shared their EoIs/ SoQs, namely: (i) Pakistan Mortgage Refinance Company (PMRCL); (ii) Pakistan Housing Finance Company Ltd (PHFCL); (iii) ICD-Islamic Development Bank, KSA (ISDB); and (iv) IFIC Bank PLC – Bangladesh.

The EoI/ SoQs were evaluated/reviewed by the FAC. ICD-Islamic Development Bank, KSA withdrew its interest (in Sept/ Oct 2022 citing change in their investment policy/ deficient information, while IFIC Bank, Bangladesh provided information that was found to be deficient. The remaining two IPs; i.e., PMRCL & PHFCL remained committed to the process.

Upon recommendation of the FAC in its Pre-qualification report dated Jan 31, 2023, the PC Board in its meeting held on Mar 21, 2023 approved PMRC and PHFCL as pre-qualified bidders subject to completion of Fit and Proper Test (FPT) from the regulator. Subsequently, SBP and SECP were approached to solicit FPT clearance. While SECP cleared both the pre-qualified bidders, SBP noted the non-compliant status of PHFCL and hence did not recommend it to be included in the bidding process.

Subsequently, pursuant to Rule 6 of the Privatisation (Modes & Procedures) Rules, 2001 the PC Board in its meeting held on June 15, 2023 recommended to the CCoP to: ‘consider single source/ negotiated transaction for privatisation of HBFCL with sole pre-qualified investor namely Pakistan Mortgage Refinance Company Ltd. The CCoP considered the summary on July 10, 2023 and approved the proposal regarding “privatisation of HBFCL with one single (pre-qualified) bidder”’. The Cabinet ratified the CCoP’s on July 26, 2023.

A Negotiations Committee for carrying out the negotiated sale process under rule 6(1)(d) of the Privatisation (Modes and Procedures) Rules 2001 was approved by the PC-Board dated January 8, 2024 along with delegation of full powers to negotiate the sale process and parameters for negotiation and accordingly notified on May 06,2024. Further in the same meeting, the PC Board also delegated full powers to the Negotiations Committee for carrying out the negotiated sale process and defined the parameters for negotiations.

The buyer side due diligence of HBFCL was initiated by allowing access of data room to PMRCL on December 20, 2023. While due diligence was in progress, FAC, in compliance with Rule 3 (c) of the Privatisation (Modes & Procedures) Rules, 2001, shared the initial drafts of Share Purchase Agreement (SPA) and Instructions to the Interested Party (ITIP) on December 21 and 29, 2023. The draft of SPA/ ITIP was shared with the Finance Division, State Bank of Pakistan and management of HBFCI to solicit their comments.

As per PC Delegation of Powers Regulations 2002, Sr. No. 06 (e) of Section 9(2), the final drafts of SPA & ITIP submitted by the FAC were approved by the Chairman PC on May 3, 2024 and the same were shared with the PMRCL on May 6, 2024.

Subsequently, the initial comments on the SPA & ITIP were received from PMRCL on May 20, 2024. These comments along with the changes suggested by the FAC were then presented to the Negotiations Committee in its first meeting held on July 3, 2024 for consideration. Thereafter, the management of PMRCL (through its email of July 23, 2024, letter of July 30, 2024 and emails of August 2, 5, 7, 12 & 19, 2024) shared additional comments on various terms and conditions of SPA & ITIP.

The overall list of SPA & ITIP terms along with additional comments by PMRCL including FAC’s feedback was finalised. These changes were incorporated in the final drafts of SPA & ITIP which were subsequently approved by the Chairman PC (Chairman of the NC) on October 2, 2024.

The approved drafts of ITIP & SPA were later shared with the PMRCL management for acceptance. Furthermore, PMRCL vide their e-mail of December 31, 2024 conveyed their acceptance on the ITIP and SPA. The management of PMRCL, through its letter of December 24, 2024, communicated its intent of acquiring 51 percent shares of HBFCL.

Based on the final terms and conditions (SPA and ITIP), on November 7, 2025, pursuant to Rule 4 (3) & 6(1) of PC (Valuation of Property) Rules, 2007 and Regulation 3 Sub-regulation 1(i) of PC (Conduct of Board Meeting) Regulations 2019, the FAC comprising MCB Bank, Elixir Securities & EY Ford Rhodes, presented the following along with its recommendations to solicit PC Board’s recommendation pursuant to Rule 6(2) of PC (Valuation of Property) Rules, 2007 for submission of the same to the CCoP for consideration and approval: (i) valuation methods used by the FA and FA’s recommendations; (ii) valuation Note listing appropriateness of methodology, adjustments and key assumptions used in the development of financial model and the valuation report with FA’s recommendations; and (iii) valuation report containing the reference price with FA’s recommendations.

The PC Board, in its meeting held on November 7, 2025, considered the valuation of HBFCL presented by the FA and after detailed deliberations, recommended the reference price for consideration and approval of the CCoP.

Pursuant to Para 2 (vii) and (ix) of the Cabinet Division’s notification of March 21, 2024, read with Rule 6, Sub Rule (2) of the Privatisation Commission (Valuation of Property) Rules, 2007, the recommendations of the PC Board, regarding the Reference Price based on the terms and conditions of the bidding documents, are required to be submitted to the CCoP for approval.

According to sources, CCoP in its meeting held on November 28, 2025 cleared the proposal of Privatisation Division.

Copyright Business Recorder, 2025