Pakistan plans IPO to sell 10% stake in Habib Bank

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Karachi, May 30: Pakistan’s government plans an initial public offering to sell a 10% stake in Habib Bank Ltd, the nation’s second-largest lender, raising funds to cut state debt.

The IPO, which will cut the government’s holding to 39%, is likely in the next few months, Habib Bank President Zakir Mahmood said in a May 24 interview in Karachi. The rest of the stake may be sold in five to seven years, he said.‘‘There’s been a lot of clamor for Habib to be listed,’’ Mr Mahmood said.

Pakistan is selling state assets to help repay $36.7 billion of overseas debt, under a divestment program forecast by the government to raise a record $3.6 billion in the year ending June. The Habib IPO is also one of the last steps in a World Bank-funded revamp of Pakistan’s banking industry, in which the government has cut its holding to 20% from 80% in five years.

‘‘The banking sector is one of Pakistan’s success stories,’’ said Agost Benard of Standard & Poor’s, Singapore.