Billionaire Mian Mohammad Mansha is eyeing Kazakhstan and the Mideast for banking and also looking at Canada, with a Pakistani community estimated at more than 300,000 people
ON a September evening when many of Pakistan’s 165 million people were breaking their fast during the Muslim holy month of Ramadan, billionaire Mian Mohammad Mansha, the country’s richest man, was deciding whether to buy an Indonesian bank.
A phone call to his Lahore office interrupted him: Turn on the television, his son Hassan implored. The Marriott Hotel in Islamabad was in flames after terrorists had detonated a truck packed with explosives. The blast, in a security zone less than a kilometre from the presidential residence, killed 53 and injured 266.
“It was terrifying,” says Mansha, 61, chairman of the Nishat Group financial, textile and cement-making empire, who says he stays at the Marriott when he’s in the capital. Just hours before the blast, Asif Ali Zardari, Pakistan’s new President, had vowed to rid the country of the “cancer” of terrorism.
As Pakistan battles extremist-inspired violence and its worst economic crisis in a decade, Mansha says he’s keeping Nishat Group’s expansion on track.
At home, where his MCB Bank Ltd is the biggest lender by market value, he was in talks in October to buy a rival he declines to name. He’s looking at four banks in Indonesia, the only country with a bigger Muslim population than Pakistan.
By May, he’ll open a machinery and automobile leasing company in Azerbaijan, a predominantly Muslim country between Iran and Russia. He’s eyeing Kazakhstan and the Mideast for banking. And he’s also looking at Canada, with a Pakistani community estimated at more than 300,000 people.
Following India Mansha started building in the decades of upheaval that followed Pakistan’s split with India after their independence from Britain in 1947.
Now he’s taking a cue from entrepreneurial Indians. Billionaire Mukesh Ambani, chairman of Reliance Industries Ltd, and Ratan Tata, chairman of Tata Group, expanded as India grew at an average annual rate of 8.8 per cent in the five years ended on March 31, 2008.
Pakistan almost kept pace with its larger neighbour: Its gross domestic product rose at an average of 7 per cent during the five years that ended on December 31, 2007.
“I want to be the first Pakistani, like some of our counterparts in India, to really go out and show that we Pakistanis can even be successful outside Pakistan,” Mansha says two days after the Marriott bombing.
Mansha is optimistic during a dire period for Pakistan.
IMF Bailout By 2008, Pakistan was again seeking IMF help. On November 25, it won final approval on a US$7.6 billion loan package after foreign reserves shrank 74 per cent to US$3.5 billion in the 12 months ended on November 8. The Karachi Stock Exchange 100 Index, which had more than doubled to become the world’s best performer in 2002, tumbled 35 per cent in 2008 as of December 2.
The exchange imposed trading curbs on August 28, preventing shares from dropping below their August 27 levels. Inflation jumped to a 30-year high of 25.3 per cent in August, and the Pakistani rupee plunged to a record 83.40 to the dollar in October. All of that came on top of the global financial crisis. Europe and Japan fell into recession in the third quarter.
Mansha, who estimates his fortune at about US$4 billion, says the world’s economic woes are making companies cheaper for people like him who have money to spend. He added to his purse in May by selling 20 per cent of MCB Bank to Malaysia’s Malayan Banking Bhd for US$907 million. That gives him about US$1 billion for takeovers in the next 12 months.
‘Opportune Time’ “It’s an opportune time for us,” Mansha says, wearing a crisp white shirt with gold cuff links, a red tie and dark slacks in his office, where Perfect Hostage: A Life of Aung San Suu Kyi is one of about 100 titles on a ceiling-high bookshelf. Democracy advocate and Nobel Peace Prize winner Suu Kyi is under military house arrest in Myanmar.
Mansha isn’t a typical meeting-going executive. He hashes out deals on his mobile phone, often while walking alone in a park across the street from the Lahore home he shares with his wife, Naz, and his three US-educated sons and their families.
“He maintains a low profile, and his people are guided to be the same,” says Muhammad Farid Alam, chief executive officer of AKD Securities Ltd, one of Pakistan’s largest brokerages. If Mansha doesn’t identify himself, people may not recognise him, Alam says.
Mansha keeps his business in the family. Eldest son Raza, 36, graduated from the University of Pennsylvania in 1994 with a bachelor’s degree in international relations. He runs D.G. Khan Cement Ltd, Pakistan’s second-biggest cement maker. Umer, 35, oversees Nishat Group’s textile ventures.
Power Business Hassan, 28, is in charge of the power business. Hassan’s wife, Iqraa, 26, heads a venture that plans a luxury hotel in Lahore with Le Meridien, which is owned by Starwood Hotels & Resorts Worldwide Inc.
“You will never see my sons in parties,” says Mansha, whose view out his office window includes Lahore’s oldest golf course. “We keep to ourselves and try to do whatever we have to do.”
So far, MCB Bank has dodged the global credit crunch.
With Pakistan’s banking system in its infancy, most lenders stick to such basics as savings accounts. They’ve avoided the high-risk loans and derivatives that got their US and European counterparts into trouble, says Syed Ali Raza, president of National Bank of Pakistan, the country’s biggest lender by assets.
MCB Bank’s net profit rose 10 per cent in the quarter ended on September 30 on revenue of 12.8 billion rupees (US$160 million), up 31 per cent from a year earlier. At the end of September, MCB was able to cover 90 per cent of potential loan losses, says Abdul Shakur, an analyst at Invest Capital & Securities Ltd.
Plenty of Capital MCB says its capital adequacy ratio -- a measure of capital reserves compared with assets at risk -- was 16.21 per cent at the end of September, among the best in the world. Mansha’s D.G. Khan Cement had a 223 million rupee loss in the quarter as loan costs rose. A year earlier, profit was 267.9 million rupees.
Nishat Group’s five publicly traded companies -- Adamjee Insurance Ltd, D.G. Khan, MCB Bank and textile ventures Nishat Mills Ltd and Nishat (Chunian) Ltd -- contributed 7.2 per cent of the Karachi index’s market value as of December 2. Nishat Group has nine privately held units, including charter jet operator Pakistan Aviators & Aviation Ltd and a company that makes bags for cement. They provide many of Pakistan’s goods and services.
“The typical narrative on Pakistan is a war-and-terror type of perspective,” says Soofian Zuberi, Hong Kong-based head of Asia equity capital markets at Merrill Lynch & Co, which advised on MCB's 2006 share listing in London and the stake sale.
“Nishat Group demonstrates the potential for companies in Pakistan to make profits, reinvest those profits in the country and generate strong returns.”
Bright Spot MCB Bank shares have been a bright spot for investors.
The stock returned an average of 55 per cent a year in the 10 years ended on October 31. That compares with 28 per cent annually for the Karachi index. In 2008 through December 2, MCB’s shares dropped 41 per cent as the rupee and foreign exchange reserves fell.
“It’s a very good bank, which is operated very professionally,” says Mark Mobius, executive chairman of Templeton Asset Management Ltd, which counts MCB among its US$30 billion of emerging-market stocks. “Pakistan is going through some difficult times, but the good news is that we now have a democratic government, and business goes on.”
Mansha says Zardari’s fledgling democratic government, working with entrepreneurs like him, can help stabilise Pakistan by providing jobs to curb poverty in South Asia’s second-largest economy. - Bloomberg
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