Adil Najam
On Tuesday the Karachi Stock Exchange’s (KSE’s) KSE-100 Index - Pakistan’s equivalent to the Dow Jones Index - broke the psychological barrier of 15,000 for the first time. At the time of writing this (on what is Wednesday morning in Pakistan) the Index remains well above that mark.
The rise of the stock market(s) in Pakistan in recent years has been phenomenal. Much of this matches the rise of emerging markets all over the world, but the rise over the last year is particularly phenomenal given just how depressed, depressing, uncertain and unclear the politics of the country has been. My friends who work in the financial sector tell me that money can be made from bad news as much as from good news. I am sure they are right, though I am not sure if I understand all the nuances of how.
But it still intrigues me why and how the market in an economy like Pakistan - where the stock market itself is rather small in terms of size as well as participation - works in relation to what is happening in the society at large. The charts, and news, clearly indicate that the stock exchange in Pakistan has not been oblivious to the political and socio-economic upheavals of the last many months. But the direction seems to have been clearly upwards and it is not clear just how much of those events are reflected in the market.
One is used in larger markets (USA, Europe, Japan) to seeing the happenings in society and politics to have deep and immediate impacts on the market fluctuations. Is it the same in Pakistan? Or is it that because so many fewer people are actually invested in stocks that the stock market’s rhythms are less intertwined with local happenings and more with global and international happenings (especially if much of the capital flow is from international investors)? And, if, indeed, the stock market in Pakistan is as much of a barometer and reflection of what is happening in the country, then what is it that the market has been telling us all year, and is telling us now?
I know that many of our readers have far greater expertise in this area. Maybe they can help me and others decipher the meaning of all of this better.
(Graphs from Bloomberg)
Nilaam, a newly launched auction web site, brings the rich benefits of e-commerce to a growing Pakistani base of Internet users.
“Nilaam will make social commerce a reality in Pakistan,” says Akbar Mithani of Mithani Capital Partners, the U.S. private investment firm that is launching the web site. “We want to expand economic opportunities in Pakistan by fostering an emotionally satisfying experience for Pakistanis to explore, learn, shop, share and talk with each other.”
Nilaam will be launched on April 15, 2008, at http://www.nilaam.pk, with the intention of transforming Pakistani shops and business owners into e-commerce enterprises and entrepreneurs. Nilaam will offer a wide selection of electronics, apparel, automobiles, real estate, gaming, jewelry, music, clothing, and other services.
Nilaam will offer its users many of the features of eBay, such as seller reviews, seller feedback, seller history, buy-now options, and bidding options. The web site will primarily reach out to individuals looking to dispose of goods they no longer want, and as well as small business owners. Shop owners or business owners in Lahore can now sell to buyers not just in close proximity but to anyone even as far away as Karachi or the United Arab Emirates.
“Pakistan has grown from 133,000 Internet users in 2000 to over 18 million today,” says Mithani. “There are no Wal-Marts, No Home-Depots, No Remax’s, No Japanese car dealerships, But now there will be Nilaam, which will bring buying and selling to the consumer’s desktop.”
About Mithani Capital Partners
Mithani Capital Partners is a privately held company specializing in the acquisition and development of innovative education, technology and real estate assets. Mithani Capital Partners develops and implements strategies to harvest ripening opportunities in emerging markets. Having acted as principals in distressed acquisitions, the firm understands the meaning of risk, reward, value enhancement, capital allocation, and profit maximization. Mithani Capital looks for opportunities to create significant consumer value, whether through a New Urbanist influenced development in Pakistan or a new educational avenue in the United States.
By By Shahzada Irfan Ahmed
3/12/2008
LAHORE: At a time when the country is passing through one of the most turbulent times in its history, it is no ordinary development that a Pakistani Internet company has attracted investment from two of the world’s top 25 venture capital funds.
On January 14 2008, amidst political unrest and bomb blasts, Naseeb Networks secured a multi-million dollar venture capital investment from ePlanet Ventures and Draper Fisher Jurvetson (DFJ), according to its Chairman and CEO, Monis Rahman. These two top Silicon Valley funds, which have invested for the first time in a Pakistani company, are well known for their legendary investments in companies such as Hotmail, Skype and Baidu.
Talking to The News, Monis said that this investment was historic because it is the first time that reputed foreign venture capital funds have invested in a Pakistani company that is targeting the local market. Other companies such as Align Technology raised venture funding in the past, but relied on foreign markets for their revenue.
The investments in these companies were made mainly for the reason that engineering and IT costs in this part of the world are low. But, he said, the case of Naseeb Networks is notably different as it is a company that is targeting its revenue from the local market and has won confidence of venture companies by showing extraordinary results in a very short time.
Monis said that although he cannot disclose the exact amount of the multi-million dollar investment, it was more than he originally wanted. However, top venture capital companies are not content with taking control of only a small share in such cases. “Funding is just part of the equation. The global expertise and experience that our investors bring to our board are invaluable.”
He stated that two venture capitalists from ePlanet Ventures and DFJ are at number 8 and number 23 respectively in Forbes Midas List of top 100 venture capitalists in the world. ePlanet and DFJ have backed companies like Skype and Hotmail, and helped them become what they are now, he said adding, “Their investment in a Pakistani Internet company is a huge vote of confidence, not just for what we are doing as a company, but is also a vote of confidence for the potential that Pakistan has to offer. If we are successful, the floodgates of investment can open for other Pakistani companies.”
Commenting on his company’s rapid growth, Monis told The News that the number of registered users on the company’s job portal, ROZEE.PK, have increased to 650,000 from 300,000 recorded last year. Naseeb Networks maintains websites offering online recruitment, social networking and communication services.
He said that according to different rating agencies, the company’s job portal ROZEE.PK, is the second most visited Pakistani website after that of Jang Group. Secondly, Monis said that Naseeb Networks has been profitable since 2004 and this investment will be used as growth capital to expand his business.
In order to attract venture capitalists to invest in Pakistan, Monis said that it was not enough to just demonstrate his company’s success. He had to sell the potential of Pakistan as a market.
According to Monis, Internet penetration is growing at an exponential rate in Pakistan. Investment amounting to US$1 billion has been made in the country’s Internet infrastructure by companies including Mobilink, Wateen Telecom, and Burraq Telecom. Public access to high speed Internet would grow dramatically due to technologies such as WiMAX being introduced, he said.
“Pakistan’s Internet users are likely to increase in the coming years in the same manner as mobile subscribers have grown from less than 3 million in 2002 to over 70 million in 2008,” he added.
Monis said that 7.5 per cent of the Pakistani population has access to Internet, as compared to 4.5 per cent in India. These fundamentals can potentially make Pakistan as attractive a destination for investors as India, keeping in view that both the countries have very similar dynamics.
Monis has worked with Intel Corporation in Silicon Valley, where he was awarded several patents for his work designing microprocessors and set up his own company there before coming back to Pakistan after 9/11. He tells The News that Naseeb Networks’ job portal, ROZEE.PK, which was launched towards the end of 2005, has helped thousands of job seekers get rewarding jobs. “Over 8,800 leading companies including UBL, Mobilink, Engro Foods and Nestle use ROZEE.PK in Pakistan today to advertise their jobs and hire the best talent. A significant piece of our revenue comes from employers who advertise on our site,” he adds.
In his concluding remarks, Monis said that investors typically have two competing instincts, greed and fear. “During the past few months, investors have had plenty to fear in Pakistan. We were fortunate that the strengths of Naseeb Networks, coupled with the potential that Pakistan has to offer, tipped the scales in favour of greed.”