Currently, financial bidding is held by the Evaluation Committee on Strategic Investment Withdrawal only after potential suitors have obtained security clearance, officials told PTI.
The government sells and manages its majority stake
In the 2018 Guidance Note on Strategic Withdrawals by the Department of Investment and Public Assets (DIPAM), the core group of investment withdrawals, led by the Chief Cabinet Secretary, requires security clearance to be the “successful candidate” for sales.
If the highest bidder does not get a security clearance, the next highest bidder was given the option to match the price offered by the highest bidder.
Officials said the guidance notes had been tweaked because they noticed some ambiguity in the rules.
“Once a monetary bid is initiated, the entire strategic sale process is almost complete. After that, if the highest bidder does not get a security clearance, the entire process is wasted,” said a person familiar with the matter.
DIPAM, the government agency that manages the sale of shares, issued a proforma for the acquirer’s security clearance application last week.
According to performers, profits of more than 10% on bidding entities require parent-child relationships and useful ownership disclosure in order to obtain security clearances.
If the acquirer is a single bidder, the details of its directors and partners, such as nationality, address, parent-child relationship, unique ID number of country of residence, passport number, etc., must be shared with the government.
Also, a self-declaration (if any) regarding the nature and extent of bidder presence / operation in China and Pakistan.
In strategic sales, bidders first express interest or make preliminary bids. The government then conducts due diligence, giving bidders access to the company’s books.
Eligible bidders are then shared with the stock purchase agreement, after which interested bidders place price bids.
The government has budgeted to collect Rs 1.75 from the withdrawal of investment next year, up from Rs 32,000, which is estimated to be demolished in the current fiscal year.
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