Fauji Fertilizer Company has been cleared to join the consortium acquiring a 75 percent stake in Pakistan International Airlines, expanding the investor group behind Pakistan’s largest privatization deal in nearly two decades.
The Privatization Commission of Pakistan approved the fertilizer company’s inclusion in the consortium led by Arif Habib Corporation, which won the Rs135 billion (about $480 million) bid for the national airline in December.
The decision was taken during a meeting chaired by Privatization Adviser Muhammad Ali and will now be sent to the Cabinet Committee on Privatisation for final approval.
The addition of Fauji Fertilizer Company had been anticipated. When Arif Habib Corporation secured the winning bid over a competing group led by Lucky Cement, officials indicated that additional partners could be brought in later. Under the deal structure, the consortium is permitted to nominate up to two new members.
Arif Habib Corporation remains the lead investor and majority stakeholder. Other members of the consortium include Fatima Fertilizer, AKD Group, The City School, and Lake City Holdings.
The first closing of the transaction is expected in late April. At that stage, the consortium must pay about two-thirds of the bid amount, roughly Rs. 83.3 billion. The group will also decide whether to purchase the government’s remaining 25 percent stake, which is available at a 12 percent premium.
The structure of the transaction directs Rs. 124.875 billion into PIA itself rather than the national treasury, providing the airline with funds to stabilize its operations.
The privatization of PIA is a key component of Pakistan’s reform commitments under its program with the International Monetary Fund, which aims to reduce fiscal risks posed by loss-making state-owned enterprises. Before the deal, the airline had been incurring annual losses of around Rs. 50 billion.
Separately, the Privatization Commission board also recommended revising its fee structure to strengthen financial sustainability and support broader institutional reforms.
