KARACHI (January 02 2009): The National Investment Trust (NIT) has formally launched the much awaited Rs 20 billion NIT State Enterprise Fund (NIT-SEF) on Thursday. This is an open-end fund and is a separate fund in all respects from the existing funds being managed by NIT, Tariq Iqbal Khan, Chairman and MD, NIT said at press conference here.
“NIT is now in a position to launch the NIT-SEF without any delay and NIT has completed all the necessary legal work, which includes signing of the agreement with the financing institutions and the approval of guarantee by the government of Pakistan”, he said.
The legal work which entailed a lot of details and paper work, including the registration and approval of the fund, financing agreements, guarantee, etc has been completed. He said that the fund will starts buying soon. However, the fund will invest in only eight eligible stocks, which are OGDC, PSO, PPL, SNGPL, SSGC, KAPCO, NBP and PTCL.
He pointed out that the four institutions provided financing for the said fund. Among these financing institutions, NBP contributed Rs 7 billion, EOBI provided Rs 5 billion, State Life Corporation of Pakistan invested Rs 2.5 billion while the remaining Rs 5.5 billion were given by a banking syndicate.
He said that these financing institutions invested this amount at the rate of KIBOR+1 for three years and they are bound to not withdraw their money before the given three years time. However, NIT has the right to return their money before three years period. The government of Pakistan has given a guarantee to these financial institutions to compensate their losses, if recorded within the three years period.
He made it clear that the said financial institutions provided funds on a fix rate of KIBOR+1, and all the earnings will go to NIT. “We are bound to payback to the financing institutions on the agreed rate of KIBOR+1 on their investments in the said fund. However, all the earnings and profit on the investment of the said fund will go to the NIT”, he said. Tariq Iqbal said that this fund intends to sell units to the non-resident Pakistanis after the initial operation and after the market stabilises.
“We very strongly feel that the fund, due to these stocks with strong fundamentals, would perform well and provide the necessary security to the financiers of the fund and send strong signals to the market, which is overly depressed at this point of time”, he added. He said that this is the fourth fund managed by NIT. However, the NIT-SEF is a separate fund in all respects from the existing funds being managed by NIT.