SBP allows NRPs to invest directly into firms' shares through RDA

The State Bank of Pakistan permitted Non-resident Pakistanis (NRPs) to invest directly into the shares of companies in Pakistan through Roshan Digital Account (RDA).

The SBP has allowed this direct investment to encourage overseas Pakistanis to invest in the domestic economy. Moreover, SBP has allowed inflow from overseas through MTO so the NRPs can send remittances easily.

The central bank gave a statement, "To facilitate investment in real estate in Pakistan, financing facilities have been allowed to RDA holders through their Pak rupee account using digital channels. In addition, the inflow of funds into rupee-denominated RDA has been allowed through Money Transfer Operators (MTOs)"

Before this decision, NRPs could only invest directly in registered government securities, listed securities on the stock exchange, mutual funds, real estate with self-financing and term deposits of the banks.

SBP believes, "The above changes will not only provide more investment opportunities to non-resident Pakistani but also facilitate them to purchase property in Pakistan through bank financing"

Meanwhile, a unit of Pakistan's TPL Corp. plans to raise as much as $500 million through a private real estate investment trust, marking one of the largest such fundraisings in the nation's history.

TPL REIT Management Co. is seeking to raise 60% of the targeted funds from foreign investors, 30% from domestic investors and the rest from its parent TPL Properties Ltd., according to Ali Jameel, CEO of TPL Corp. The hybrid real estate investment trust plans to close the deal by June, and will offer an internal rate of return of more than 30% in local currency, he said.

The REIT is the third to be announced in the country this year-and fourth overall-as Prime Minister Imran Khan looks at the construction industry as a catalyst to boost the economic growth. The South Asian nation is giving tax evaders a free pass to invest in construction projects and offering subsidies for low-cost houses, while banks have been asked to increase credit exposure to 5% of the loan portfolio for the industry.

"Construction activity is picking up rapidly due to access to finance for both the developer and the buyer, and this is expected to grow exponentially over the next two years," Jameel said in an interview at his office in Karachi. "The offering will give investors an opportunity to tap into Pakistan's booming real estate."

The company plans to list the REIT within three years in Pakistan and overseas. The funds will be used to finance three real estate projects-a tech park, a high-end residential building and a gated seafront community-in Karachi, he said.

TPL Corp., a Pakistani group with businesses including vehicle tracking and insurance, is trying to scale up its realty business.

TPL's REIT is the third to be announced this year in the country after a hiatus since the nation's first such in 2015, as regulatory changes led by the Securities and Exchange Commission of Pakistan and the State Bank of Pakistan made it attractive for issuers.

Pakistan's first REIT, which holds rental assets including Karachi's most prominent mall and an office tower, offers a dividend yield of around 12% a year. REITs for a housing project in Karachi were announced in July to raise 8 billion rupees ($48 million) with an expected internal rate of return of more than 30%.