WPP chief endorses Pakistan’s prospects with expansion plans
LONDON: Pakistan, currently reeling from a run of deadly terror attacks, has received a strong endorsement of its economic prospects from one of the biggest names in the global advertising industry.
Sir Martin Sorrell, the chief executive of WPP, has said his company intends to expand its business in the south Asian country in spite of a growing Islamist insurgency and a fall in economic growth this year.
“Despite all the political and security issues . . . our businesses in Pakistan continue to grow strongly,” said Sir Martin, chief executive of WPP. “We plan to continue to grow there and develop our industry leading position in the country.”
Sir Martin is not alone. Public and private companies, including Antofagasta, the Chilean mining company, and Abraaj Capital, the Dubai-based private equity group, are seeking opportunities in Pakistan. Some small-scale investments, particularly in the energy and infrastructure sector, show companies taking a cautious approach, however.
Analysts claim that economic stabilisation has been one of the bright spots of a year of civilian rule.
The International Monetary Fund gave Pakistan a $7.6 billion rescue package at the end of 2008 to help it avoid a balance of payments crisis. The government responded to the IMF’s requests to implement prudent economic policy and cut spending over the first quarter - positive signs ahead of a donors meeting in Tokyo this month where Pakistan is seeking $10 billion in assistance over three years.
Last year, a return to civilian rule in Pakistan saw the biggest rise in deals with foreign acquirers in five years. Cross-border activity totalled $8.1 billion over these five years. Telecommunications and financials are the most targeted sectors by foreign investors. The two sectors account for 52 per cent and 35 per cent respectively.
Acquisitions by UAE, Singapore and Malaysian investors account for more than half the cross-border deals of the past five years. Abraaj Capital, the Middle East’s biggest private equity firm, agreed a $361million deal to buy half of KES Power, the holding company of Karachi Electric Supply Company.
“Our focus in Pakistan is to purchase defensive assets, like power, infrastructure, distribution, or downstream oil and gas,” said Omar Lodhi, executive director of Abraaj Capital. “We work with them to develop them for sale to strategic groups.”
CDC Group, the UK state-owned private equity group, invested in Pakistan in 2006, putting $40 million in the debut fund of Karachi-based JS Private Equity. “With its big and young population, and good commercial history, it is still an attractive investment,” said Richard Laing, chief executive of CDC. daily times monitor