JS Group has held its second and final close for its first Pakistan expansion capital and buyout fund on $158 million (€106.9 million), according to Moeen Khawaja, director of business development at the Pakistani investment firm.
The fund was targeting between $70 million to $100 million for its final close. After holding its first close on $70 million in August the fund decided to widen its fundraising efforts.
It attracted emerging markets investors such as the International Finance Corporation, CDC Group, the Asian Development Bank as well as Middle Eastern investors including the Saudi American Bank and Gulf Investment House.
The Pakistan electoral candidate and former premier Benazir Bhutto was assassinated in late December leading to widespread riots across the country.
“It does obviously affect investment sentiment but our investors are multilateral agencies that see a lot of turmoil,” Khawaja said. “In the immediate short-term it seems risky for everyone, but if you take a long-term view as an investor that understands risk there is an opportunity (in Pakistan).”
Khawaja said investor confidence in the long-term business stability in the country was emphasised by the closing of the $160 million buyout of Pakistan's Saudi Pak Bank by Japanese bank Nomura and Oman-based Bank Muscat recently. “This was a prominent leader in a very violent assassination, which is a big wobble for everyone, but the deal still closed!” he said.
Emerging markets such as China, India, Brazil as well as Pakistan were where growth would be for the next few years as opposed to Western markets, he said. ”We are confident [about Pakistan] on a bigger picture level although there will be jolts to confidence [like Bhutto’s assassination] unless something happens beyond anything anyone could predict.”
Pakistan was also attractive to investors which found India more difficult to access due to the wall of money chasing deals, especially to Middle Eastern firms, he said. The relative scarcity of money chasing deals in Pakistan made it an attractive alternative regional investment destination.
The fund bought 60 percent of car rental business Hertz’s Pakistani operations for an undisclosed sum as its first investment.