Foreign security firm pulls out of Pakistan

KARACHI: The stake of G4S – a global security solutions company operating in 125 countries – in Wackenhut Pakistan Private Limited (WPPL) has been bought out by its local partner, an official announcement said on Monday.
WPPL Chairman Ikram Sehgal, who already held 50% shares in the company, is now the sole owner of the security firm that employs over 11,000 personnel in the country.
On the face of it, a foreign company’s permanent exit from Pakistan is a bad thing. But the events that preceded the buyout tell a different story, according to Sehgal.
“It was G4S, not me, that first expressed the intention to buy out the company. It approached me with more than a fair price about 18 months ago. But I declined to sell my stake,” Sehgal said while speaking to The Express Tribune.
He added that after refusing to sell his shares in WPPL, he informed G4S about his willingness to buy out the stake of the foreign security company. “According to corporate regulations, I had to offer G4S the same price that it offered me earlier in order to make it binding.”
The deal was sealed at a lower price, however, after WPPL’s lawyers and accountants conducted due diligence – or audit of a potential investment – of the company, Sehgal noted.
“G4S officials were simply taken aback by our offer. They never expected that a Pakistani company could raise so much capital on its own,” he said.
Refusing to share the exact figure, he said Bank Alfalah, Silkbank and Summit Bank helped him raise the money.
In August, British newspaper Financial Times reported that G4S was expected to sell its stake to WPPL for about $10 million. However, Sehgal termed the estimate inaccurate.
Commenting on media reports that G4S was pulling out of Pakistan solely because of hostile government policies towards security firms with foreign stakeholders, he said eight to nine foreign security companies were currently operating in Pakistan under the guise of security consultancy providers.
“It’s a great setback for G4S. Their departure from a rapidly growing market has surprised security professionals all over the world,” he stated.
To give a rough idea about the size of the transaction, Sehgal said a successful security company’s total value was roughly eight times its annual turnover. In 2011, 30% of G4S’s total turnover of £7.5 billion came from developing markets, which included the Middle East and Gulf states, Latin America and the Caribbean, Africa, South Asia and Asia Pacific. Pakistan-specific data is not available on the G4S website.
No one from G4S was available for comment immediately.
Published in The Express Tribune, November 6^th, 2012.