I was amazed to witness the Sherlock-Homes style performance of Khawaja Asif on television in Pakistan the other day. However, it is appropriate to set the record straight on his comments regarding the Shaukat Khanum Memorial Trust (SKMT). If Asif is a man of any substance, he will appear again on television to apologize to Imran Khan, SKMT and myself. Let me tell you why?
The Shaukat Khanum Memorial Trust made a long-term real estate investment with HBG in 2008 when the market fundamentals in the GCC region were excellent, with a plan to develop it into a project. The decision by SKMT to invest with HBG was not a speculative, but a long-term investment based on sound judgment of the market fundamentals in a solid real estate, prime location in Muscat in which HBG itself had committed a substantial amount.
Imran Khan had nothing to do with the decision as it was taken by the investment committee of the board of directors. I being a director in SKMT at the time, refrained from voting to avoid a conflict of interest.
There is a misconception being propagated thatjust because the investment was through an offshore company, it is akin to a “benami” transaction. This is a totally false representationas private equity investments across the world are conducted from such jurisdictions because they are considered investment-friendly jurisdictions.
With severe corrections in the real estate market following the global economic crisis, it was rightly decided to defer the project. The investment has no leverage. However given the fact that there has been impairment in land value, HBG has taken steps to absorb the impairmentin value by grantingincreased sharesto SKMT, i.e. the reduced value of Sugarland shares will be compensated by a higher percentage shareholding of SKMT in Sugarland BVI. This preserves and protects SKMT investment. Additionally, HBG has also provided an undertaking to assistSKMT’s exit from the investment with Capital Protected.
Imtiaz Hydari, By email