A top brokerage is coming back to Pakistan after 17 years

By Cathy Chan and Faseeh MangiCLSA Ltd. is returning to Pakistan after almost two decades, as the company controlled by China’s biggest brokerage steps up its expansion into markets that are part of the government’s Belt And Road Initiative.The Hong Kong-based firm agreed to buy a 24.9 percent stake in the securities unit of Bank Alfalah, which is backed by the World Bank’s International Finance Corp., according to a statement from CLSA Thursday. The joint venture will be chaired by Aliuddin Ansari, who was chief executive officer at one of Pakistan’s largest conglomerates and previously also CEO for the local unit of Credit Lyonnais Securities Asia (CLSA).Ansari and current Alfalah Securities CEO Atif Khan will acquire a combined 12.6 percent stake, with the deal expected to be completed by November.The transaction comes a year after Pakistan was upgraded from frontier to emerging-market status in MSCI Inc.’s global indexes, which fueled expectations that, along with investments from the $60 billion China-Pakistan Economic Corridor, the country would lure a wider class of investors. CLSA, the international brokerage of China’s Citic Securities Ltd., is pushing into markets including the United Arab Emirates and Bangladesh after setting up a 25 percent-owned venture in Sri Lanka in 2014.“The cost of entry into the market is reasonable and while it remains under-owned, it is a good time to establish a formal presence,” CLSA CEO Jonathan Slone said in an interview, while declining to share financial details. “Our strategy is to establish an on-the-ground presence in all major Asian markets, with a particular focus on markets in the Belt and Road Initiative.”CLSA exited Pakistan in 2001 due to “considerable instability” at the time, he said. Slone predicts the MSCI upgrade will boost flows into Pakistan even though the market “is currently small” and the short term outlook “remains challenging.”Pakistan’s benchmark KSE100 Index has fallen about 14 percent since MSCI’s move, amid economic and political instability. Finance Minister Asad Umar -- a former head of Pakistani conglomerate Engro Corp. who was succeeded in the role by Ansari -- told Bloomberg News this month the economy may need more than $12 billion to halt a looming financial crisis. He also promised to make all Chinese agreements public after criticism of Beijing’s opaque Belt and Road loan terms.CLSA’s Pakistan venture will be called Alfalah CLSA Securities Ltd. and provide equity broking, research and investment banking services.

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