Agha Khan Fund for Economic Development eyes more stakes in HBL 

The development agency to use non-repatriated dividends to buy additional shares

KARACHI: The Aga Khan Fund for Economic Development (AKFED), the parent company of Habib Bank Limited (HBL), has expressed its interest in acquiring additional shares of HBL from the open market using the accumulated dividends that have not been repatriated amounting to Rs. 3.5 billion. This information was shared in a Pakistan Stock Exchange (PSX) filing on Tuesday.

The filing further mentioned that the purchase of HBL shares would only take place in accordance with applicable regulatory approvals.

The move comes as the State Bank of Pakistan (SBP) has disallowed the repatriation of dividends due to low levels of foreign exchange reserves. Nonetheless, the regulator allows the funds to be utilised within Pakistan to avoid a net outflow of foreign exchange reserves.

In the week ending April 20, 2023, foreign exchange reserves held by the State Bank of Pakistan stood at $4.46 billion. Meanwhile, the net foreign exchange reserves held by commercial banks stood at $5.56 billion, bringing the total liquid foreign exchange reserves to $10.02 billion. Pakistan’s economic balance is on a tightrope as the State Bank’s foreign exchange reserves plummet to a critical level, leaving only enough to cover a month’s worth of imports.

How are companies retorting?

Pakistan’s generous foreign investment policy promises full profit repatriation of 100% which made it a lucrative market for multinational companies. However, lately, its implementation has fallen short of the mark. Multinational companies operating in the country are grappling with over $1 billion in unpaid dividends, as Pakistan face constraints on dollar outflows. The situation is dire, with banks now even declining to issue letters of credit for essential imports like food and energy. The country’s foreign exchange reserves have dwindled to a multi-year low, leading the government to put a stop to large-scale dollar outflows, including those by overseas investors.

Ehsan Malik, CEO of Pakistan Business Council (PBC), told Dawn that members of the pan-industry advocacy group have stopped declaring dividends to reduce the pressure on dollar outflows. According to Malik, these multinationals, as well as their parent companies, have “stamina and perseverance” to endure such pressure. “Many (of them) have been here since 1947 and have learned to cope with the volatility, uncertainty, complexity and ambiguity of Pakistan,” Mr. Malik said.

However, investors are not happy. A group representing international investors held a meeting with the SBP governor at the end of December to resolve, among other issues, the matter of pending dividends. During the meeting, the investors urged the SBP to allow the repatriation of smaller dividends from the last quarter and to lock in the dollar value of pending dividends to avoid exchange rate losses.

Given these challenges and full dividend repatriation not in sight any time soon, AKFED retorted to acquiring more stakes in HBL. 


AKFED, is a for-profit international development agency that seeks to create economic capacity and opportunity in the developing world. It is headquartered in Switzerland. AKFED operates as a network of affiliates, with over 90 separate project companies employing over 55,000 people. In 2021, it had group revenues of approximately US$ 4 billion.

AKFED is active in 18 countries in the developing world including Afghanistan, Burkina Faso, Burundi, Côte d’Ivoire, the Democratic Republic of the Congo, India, Kenya, the Kyrgyz Republic, Madagascar, Mauritius, Mozambique, Pakistan, Rwanda, Senegal, South Africa, Tajikistan, Tanzania, and Uganda.

AKFED stakes in HBL

AKFED currently owns a majority stake in HBL, amounting to 51% of the shareholding or 748 million shares. This new development is expected to add approximately 45 million more shares of HBL to the portfolio of AKFED, which would bring its stake to around 54%.

In the aftermath of this announcement, the share price of HBL increased by Rs 5.43 from Rs 73.90 to Rs 77.94, an increase of 7.5%,  on the PSX.


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