The government has launched a second attempt to privatise House Building Finance Company Limited, appointing a KPMG-led consortium as financial adviser for the proposed transaction.
The Privatisation Commission signed a Financial Advisory Services Agreement with the consortium to take the process forward. The group includes KPMG, Bridge Factor, Haidermota & Co., HRSG and Asiatic Public Relations.
Under the agreement, the advisers will conduct due diligence, value HBFCL and recommend an optimal transaction structure. They will also help market the mortgage lender to investors and support the commission during execution.
“The consortium brings together established expertise in financial advisory, transaction structuring and execution to support the Privatization Commission in taking the HBFCL privatization process forward,” the commission said.
Why the first HBFCL sale failed
The renewed effort follows the failure of the government’s previous HBFCL privatisation process earlier this year.
Pakistan Mortgage Refinance Company Limited was the only pre-qualified bidder. It offered Rs4.2 billion for a 51% stake, against a reference price of Rs13.55 billion approved by the Cabinet Committee on Privatisation.
The Privatisation Commission rejected the offer because it fell below the approved reference price. It later recommended terminating the negotiated sale and restarting HBFCL’s privatisation with a new financial adviser.
The Cabinet Committee on Privatisation subsequently endorsed a second privatisation cycle for HBFCL. The government then launched a fresh process to hire an adviser.
HBFCL plays key role in housing finance
HBFCL is Pakistan’s oldest specialised housing finance institution. It started operations in 1952 and became an unlisted public limited company in 2007.
The State Bank of Pakistan currently holds a 90.31% stake in HBFCL. The Ministry of Finance owns the remaining government shareholding.
The lender provides financing for customers seeking to buy or construct residential properties. Its future remains important because Pakistan’s formal housing finance market has considerable room to expand.
The Privatisation Commission has previously said HBFCL holds a portfolio of around Rs18 billion and serves about 14,000 active borrowers. It also highlighted the company’s significant growth potential.
Govt eyes private investment and wider mortgage access
The government expects private-sector participation to improve HBFCL’s management, governance and operational performance while expanding access to mortgage financing.
“The privatization of HBFCL is expected to contribute to the development of Pakistan’s housing finance sector by leveraging private-sector expertise, improving governance and operational efficiency, and facilitating greater access to housing finance,” the Privatisation Commission said.
Officials expect a stronger and more competitive HBFCL to improve financing opportunities for low and middle-income households. The institution also remains part of the government’s Privatisation Programme 2024-29.
The new advisers will now work on due diligence, valuation, transaction structuring and investor outreach. The second attempt’s success will depend on attracting stronger competition and securing bids that better reflect the government’s valuation of the housing lender.
