OPINION
Suleman Maniya
The SBP has failed to manage its own investments. How can it manage Pakistan’s?
Pakistani equities. Apart from economic issues, a major part of the decline can be explained through the role of non-protection of minority shareholders rights. Foreign investors see the way that companies are run here and are not confident in the lack of safeguards for minority shareholders. If there is no protection to the rights of these investors, including domestic investors, why would anyone want to invest? The way companies are being run it seems investors are being punished for investing and taking risks. It also seems as if the key standard of decision making is putting your money in fixed income instruments or to buy US Dollars. This is indeed tragic and something which needs to be reversed. One such company is the Security Paper Limited (SEPL). The company is indirectly owned by the State Bank of Pakistan (SBP) and has seen significant inefficiency which has time and again been pointed out by investors. It is strange that nothing is being done to allay their concerns, nor of other shareholders where decision making of the management is also destroying value for majority shareholders as well. In a nutshell if SBP, the premier institution of handling Pakistan’s foreign and local his oped is written first and foremost as a student investments, can’t manage its own investments with a fiduciary of finance to give readers an understanding of the responsibility then how can it manage Pakistan’s? investment climate in Pakistan, in which minority SEPL is 40% owned by Pakistan Security Printing Corinvestors are being pushed between a rock and a poration of which Dr Reza Baqir, the Governor of SBP, is the hard place. The topic of minority shareholders is Chairman. Up until recently, the erstwhile Deputy Governor of very high importance, and sparking a debate Mr Jameel was the Vice Chairman of the company until his resurrounding them can result in much needed introspection on cent retirement from the SBP. A snapshot of the income statecorporate governance in Pakistan. ment/balance sheet of the company has also been included. The Pakistani equity markets are currently trading at one of As can be seen, operationally the company has done their lowest ever price points compared to their regional and global well. However, since the SBP acquired PSPC in July 2017 and peers. Even then, there is still incessant foreign selling in the local consequently drove the decision making at Security Papers equity markets with foreign institutional investors selling in excess Limited (PSPC owns 40% of the company), dividend payouts of $1.3 billion (and that is a Capital B) in the last three years of have consistently gone down and there has been a significant decline in it with FY21 dividend payout at an abysmal 36.6% of earnings. This is perhaps the lowest dividend payout percentage to earnings in the company over the last 10 years or so. Suleman Maniya When it comes to the utilization of cash proceeds, it has increasingly been seen that is a Portfolio Manager, Travel management has not used the cash in expansion of the business but have invested in PIBs, T Junkie, Avid Sportsman, bills and some mutual funds (whose returns have also been questionable at best). It would be best to look at the returns of these mutual funds from the time they were invested in around Public Speaker, Foodie and 2017 till now and where the returns have even been lower than the returns on fixed income opinionated. He has a MSc instruments. Finance (Gothenburg) in Things become particularly strange when you consider that Security Papers Limited has Corporate Valuation with a firm a roster featuring star ex bankers on its board. Mr Aftab Manzoor was nominated by the SBP and remained Chairman of the company for example. That is why it is surprising that the com-
The story of SEPL is a story of inefficiency, contradictions, and the typical problems of public companies in Pakistan
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