The "Too Big For Pakistan" Problem

In 2008, the year that we now know was likely the peak of this current bout of globalization, the rise of Corporate India was simply unmistakable. Not only was it the darling of the investing world, but Indian companies were seen as finally having arrived on the global stage, with perhaps no acquisition being more prominent than the acquisition of Jaguar and Land Rover – the iconic British automobile brands – by Tata Motors, the Indian automobile manufacturer best known for producing some of the world’s cheapest cars.

India’s economic heft was not just symbolized by how much foreign direct investment it could attract, or how much it could export, but also by what its companies had the capability of buying abroad. In other words, India’s strength was measured not just by how much money it could attract into India, but how much it had the capability of spending outside India.

Needless to say, this is a game that we in Pakistan know we cannot play. Pakistan does not have a local carmaker, let alone one that could buy a global rival. But we do, somewhat surprisingly, have companies that have clearly outgrown their ability to profitably invest in the Pakistani economy.

They are “too big for Pakistan”.

Four conglomerate holding companies fit this bill in Pakistan, in our view: the Fauji Fertilizer Company, Lucky Cement, Engro Holdings, and Fatima Fertilizer.

All four of these currently have more than $250 million in cash on their consolidated balance sheets right now, two of them currently have more than $500 million, and all four have had more than $500 million in cash on their balance sheet at least at some point over the past five years.