Arif Habib investment group wins PIA's auction

A Pakistani firm won an auction on Tuesday with a $482 million bid for a majority stake in the embattled national carrier PIA, a deal seen as a litmus test of the government's pledge to sell off loss-making state companies.

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Pakistan International Airlines (PIA), long accused by critics of being bloated and poorly run, has been burning through cash as the government struggles with a balance of payments crisis.

Three Pakistani firms competed in the auction carried live by state broadcasters, with representatives placing their offers in a clear box during several rounds of bidding.

The Arif Habib investment group emerged on top with a bid of Rs135 billion for the 75 per cent stake on offer. It has an option to buy the remaining 25 per cent in the coming months.

“It was essential to make this process transparent because the biggest transaction of Pakistan's history is about to take place,” Prime Minister Shahbaz Sharif told his cabinet in a televised statement as the bidding began.

The rival bidders were a consortium led by Lucky Cement, which bid Rs134 billion, and the private Pakistani carrier Air Blue.

The sale offer comes after last year's failure to privatise PIA, with just one bid for $36 million - far below the $300 million to $305 million wanted by the government.