LAHORE - The Arisaig Asia Consumer Fund, another minority shareholder of Unilever Pakistan, has written a letter to the Managing Director Karachi Stock Exchange, opposing the de-listing of the company.

ACACIA Partners, minority shareholder in Unilever Pakistan has already sent its objection to Islamabad Stock Exchange and SEC. Now it becomes difficult for SEC to ignore minority shareholders as Arisaig has also joined ACACIA in this regard.

Arisaig Fund is $3b in size and has invested $l60m in Pakistan’s equity market and owns, in addition to Unilever Pakistan, a 5pc stake in Colgate Pakistan and a 2.25pc stake in Nestle Pakistan. This makes the Fund one of the largest foreign investors in the Pakistan equity capital market. The Fund is a minority shareholder in Unilever Pakistan, owning 778,890 shares or 5.86pc of the Company. The Fund has invested in the Company since 3 Mar 2004 and would normally expect to remain a shareholder for the very long term.

The request from foreign investor comes at a time when the Karachi Stock Exchange has rejected the price of Rs 9700 as buyback price asking it to be raised to Rs 15000, whereas experts believe that setting up of price should be a concern among stakeholders thus involving and giving importance to minority shareholder keeping the international norms in perspective.

ACACIA has been investing in Unilever Pakistan for the last seven years with around 4.1 percent of the Unilever’s outstanding shares. Acacia has long-term shareholders of many Pakistani companies over the past two decades, including Colgate Pakistan, Jahangir Siddiqui & Co., EFU Life, Adamjee Insurance, New Jubilee Life, IGI Insurance, GlaxoWellcome Pakistan, Siemens Engineering Pakistan, Lakson Tobacco, Pakistan Tobacco. The current investments of ACACIA in Pakistan have a value of approximately $75 million.

‘In our view, the KSE should reject the proposed de-listing because we feel the offer is disadvantageous to minority interests in the company; is disadvantageous to the KSE; and is potentially disadvantageous to Pakistan’s national finances,’ stated Lindsay Cooper in the letter to the KSE and SECP.

Similarly, he adds, the offer is also disadvantageous to the KSE because it is clear that the controlling shareholder is looking to privities the company at this cheap valuation because it feels it can due to the fact that delisting rules in Pakistan are more lenient than they are elsewhere. ‘In Pakistan only 75pc of all votes at an AGM are required to pass a delisting resolution. In this case, the controlling shareholder already owns 75pc of the Company’s shares. Minority interests are clearly disadvantaged as their objections carry no weight in such circumstances,’ he reasoned.

The funds pointed out that the removal of Unilever Pakistan, the 7th largest weighting in the KSE-100 index, would result in a severe under-weighting of consumer staples in the index. Indeed, the current weighting of 6.9pc to consumer staples is already very low and would fall to less than 4pc if this transaction were to occur.