True Believer

Pakistan is not for the timid. But First Capital and Worldcall's CFO argues that its economy is built to thrive.

Sardar Ali Wattoo, CFO of First Capital and Worldcall Group, a Pakistani
conglomerate, has no difficulty remembering what he was doing on the
afternoon of December 27. When Benazir Bhutto was assassinated in
Rawalpindi, Wattoo was in Lahore watching as investors piled into a
US$25 million Islamic bond floated by Pace Pakistan Ltd., one of First
Capital’s fastest growing businesses. The subscription period for the bond
was due to close the following day. Within hours of the murder, nervous
U.S. investors — funds that targeted South Asian growth companies
— were calling him. “Would the flotation collapse?” they wanted to know.

Riots tore through Pakistan’s cities, and angry crowds burned
stores and smashed bank windows. The Lahore and Karachi
stock exchanges dived the following day, and Wattoo began to
get the uneasy feeling that support for his businesses was evaporating.
Omantel, the Omani state telecom carrier, planned to
buy a US$200 million stake in WorldCall, First Capital’s fixedline
telecom business that specializes in everything from payphones
to broadband service. They put the investment on hold,
fearful of travel to Pakistan. From Dubai, where Wattoo had been
in the final stages of listing Pace Pakistan, the company’s real
estate unit, on the Dubai stock exchange, an official from the
National Bank of Dubai warned that he was withholding the
authorization necessary for the listing until stability returned.

Wattoo met with his boss, First Capital’s founder Salmaan
Taseer, an influential businessman with a political background.
Taseer is currently on leave from the business, seconded to Pakistan’s
interim government as caretaker minister of industries.
Surely, they could build a case for the company’s stakeholders to
hang fire. Taseer agreed to put his business hat back on and work
the phones. Pakistan had been here before, they argued; the economic
situation will stabilize and the market will rebound.

And that’s what happened. The exchanges recovered their
lost ground. Investors regained enthusiasm for the
bond, which was oversubscribed by US$13 million.
Omantel bought its stake and pledged an additional
US$25 million in direct investment. The National
Bank of Dubai overcame its jitters and authorized
the listing. Pace is due to list in Dubai as of CFO
Asia’
s press-time.

It wasn’t the first time that Wattoo had taken his
case for Pakistan to the world and won willing partners.
“Pakistan is resilient,” says Wattoo. “I understand
[investors'] reservations, but the economic story is
still robust.” He adds, “It’s a relief that many of our
foreign partners can see this, too.”

A World of Trouble

Pakistan is not for the faint of heart. Yet it has proven
to be one of the world’s most counterintuitive of success
stories in recent years. Even as CNN broadcasts
images of burning embassies, lawless tribal enclaves,
and broken bank windows, another Pakistan has
warily gained confidence and emerged economically
robust. Economic stability has graced the country
as the controversial Pervez Musharraf, who took
power in a military coup in 1999, buffered his
longevity by turning the economy over to pro-market
reformers. In this, his regime has been successful. Pakistan’s
economy has grown an average of 7 percent in the past four
years and its booming stock exchanges in Lahore and Karachi
have enriched local and foreign investors alike.

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