Glossary · Economy & Macro
Privatisation
The transfer of ownership of a state-owned enterprise to private investors, typically through a public offering of shares. Pakistan has conducted several privatisations through the PSX over the years.
01—What is Privatisation?
The definition — and what it means in practice.
Privatisation is the transfer of ownership of a state-owned enterprise to private investors. It often happens by selling shares to the public, which can turn the enterprise into a listed company with many shareholders rather than a single government owner. Privatisation can be full (control shifts to private owners) or partial (the state keeps a stake while selling a portion to the market).
For investors, privatisation matters because it can create new investable opportunities and change how a company is run and monitored. When an enterprise becomes publicly owned, it may face stronger disclosure, audited reporting, and shareholder oversight, which can affect governance and performance. It can also increase the investable “free float” in the market, influencing liquidity, index representation, and the range of sectors available on an exchange.
If the government sells 1,000 shares of a state firm at Rs 100 each to the public, ownership shifts from the state towards private investors through the share sale.
- Privatisation transfers a government-owned business to private ownership, often through a public share sale.
- It may be partial or full, depending on how much equity is sold and who controls the company.
- Public ownership typically increases scrutiny through disclosures, audited accounts, and shareholder votes.
- Privatisations can add new listings or increase free float, affecting liquidity and index composition.
02—How privatisation works on the PSX
The Pakistan-specific rules, conventions, and numbers.
In Pakistan, privatisation has been carried out through the Pakistan Stock Exchange (PSX) over the years, typically by offering shares to investors. If the shares are listed, trading takes place on the PSX, which was formed in 2016 by merging the Karachi, Lahore, and Islamabad stock exchanges. The market is regulated by the Securities and Exchange Commission of Pakistan (SECP).
A retail investor encounters a privatisation the same way as other listed equities: by placing orders through a broker that holds a Trading Right Entitlement Certificate (TREC). After a purchase, clearing and settlement are handled through NCCPL, and the shares are held electronically at the Central Depository Company (CDC). PSX equity settlement is T+1, and investors need a Unique Investor Number (UIN).
Once shares are listed and actively traded, normal PSX trading features apply in practice, such as board lots (typically 100 shares) and daily price limits (circuit breakers) for most equities based on the previous close (LDCP). If the newly listed company declares a cash dividend later, Pakistan’s withholding tax on dividends applies, and dividend amounts are commonly quoted as a percentage of Rs 10 face value for most listed shares.
03—Common misconceptions
Where investors most often get this wrong.
Privatisation always means the government sells the entire company.
Privatisation can be partial. The state may sell a portion of shares to the public while retaining a stake or influence, depending on the transaction.
A privatised company is automatically a better investment.
Privatisation changes ownership and oversight, but performance still depends on fundamentals, governance, and market conditions. Listing does not guarantee results.
Privatisation only matters at the first sale of shares.
It can matter afterwards too, as increased free float, disclosure, and shareholder decision-making can affect liquidity, valuation, and future corporate actions.
04—Using privatisation on BSL
Where this term shows up across the platform — with live data.
- Browse listed shares and their profiles on Stocks.
- Compare companies by sector using Sectors.
- Filter and shortlist candidates using the Stock Screener.
- Learn how a new listing fits into the wider market view on Market.
05—Frequently asked questions
What investors ask about privatisation on the PSX.
Frequently Asked Questions
Privatisation is the transfer of ownership of a state-owned enterprise to private investors. In Pakistan it is often done by selling shares to the public, which may be listed and traded on the Pakistan Stock Exchange (PSX).
If the shares are listed, investors buy them through a TREC-licensed broker on the PSX like any other equity. Settlement is T+1 via NCCPL, and shares are held electronically at the CDC. A Unique Investor Number (UIN) is required.
They are related but not identical. An initial public offering (IPO) is a company’s first sale of shares to the public. Privatisation is specifically about selling a state-owned enterprise to private investors, often using a public offering mechanism.
Yes. A listed, privatised company can declare cash dividends like any other listed company. For most PSX shares, dividends are commonly quoted as a percentage of Rs 10 face value, and withholding tax on cash dividends applies based on filer status.
A listed company is subject to market disclosure and corporate governance processes, including audited annual accounts and Annual General Meetings under the Companies Act 2017. That can increase transparency compared with a purely state-owned structure.
06—Related terms
Keep building the picture.
The first time a company offers its shares to the public on a stock exchange. On the PSX, IPOs are conducted through the e-IPO system. Successful IPOs often attract significant interest from both retail and institutional investors.
A company whose shares are officially traded on the Pakistan Stock Exchange, following SECP and PSX approval and compliance requirements.
The market where new securities are issued for the first time, either through an IPO or subsequent share offering. Money raised goes directly to the issuing company.
The total market value of a company's outstanding shares, calculated by multiplying the share price by the number of shares in circulation and used to classify companies as large-cap, mid-cap, or small-cap.
A yearly meeting held by a listed company where shareholders receive financial updates, vote on key decisions, and elect or re-elect board directors. Pakistani listed companies are required to hold AGMs under the Companies Act 2017.
Financial statements that have been independently reviewed and verified by a certified external auditor. Listed companies on the PSX are required to publish audited annual accounts.
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