Key Takeaways
- The Privatisation Commission (PC) has been instructed to obtain firm corporate guarantees and regulatory confirmations.
- Fatima Fertiliser Company Limited must provide a guarantee ensuring it will remain a guarantor under the transaction.
- The government aims to ensure legal and financial security in the complex privatization process.
The federal government has tightened conditions for the ongoing privatisation of Pakistan International Airlines Corporation Limited (PIACL), directing the Privatisation Commission (PC) to secure corporate guarantees and regulatory confirmations. This move is part of a broader effort by the Cabinet Committee on Privatisation (CCoP) to ensure that the transaction remains legally and financially secure.
According to official documents, Fatima Fertiliser Company Limited has been asked to provide an appropriate corporate guarantee ensuring it will continue as a guarantor under the Share Purchase and Subscription Agreement (SPSA). In case its wholly owned subsidiary, Fatima Capital Limited, fails to meet its obligations, Fatima Fertiliser is required to fulfil all such commitments without exception. This decision underscores the government's commitment to safeguarding the integrity of the transaction.
The CCoP has also directed the PC to seek formal confirmation from the Securities and Exchange Commission of Pakistan (SECP) regarding the status of City Schools (Private) Limited, now renamed City Group Holdings (Private) Limited. The company’s recent name change is being monitored to ensure it does not affect its shareholding structure, business model, or contractual obligations under the transaction.
The privatisation process for PIACL involves a consortium led by Arif Habib Corporation Limited (AHCL), comprising Fatima Fertiliser Company Limited, Lake City Holdings (Private) Limited, City Schools (Private) Limited (now renamed as City Group Holdings), and AKD Group Holding (Private) Limited. The transaction was ratified by the federal cabinet on January 2, 2026, marking a significant milestone in the government’s privatisation agenda.
The successful bidder is required to establish a Special Purpose Vehicle (SPV) and deposit an escrow amount of Rs3 billion. Following this, PIA Equity Limited was incorporated as the SPV, serving as the purchaser entity for acquiring shares in PIACL. The transaction documents, including the SPSA, Shareholders’ Agreement (SHA), and related legal instruments, were formally executed on January 29, 2026.
The privatisation of PIACL stems from a decision taken by the CCoP on December 30, 2025, when it approved the divestment of a 75 percent equity stake in PIA Holding Company Limited’s (PIAHCL) interest in PIACL. The transaction also includes a call option for the remaining 25 percent stake, allowing the investor consortium to potentially acquire full ownership at a later stage.
The government's decision reflects its ongoing efforts to streamline and secure the privatisation process, particularly given the complexity of the transaction involving multiple investors and evolving corporate arrangements within the bidding consortium.
