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Investment Corporation of Pakistan.

The Investment Corporation of Pakistan (ICP) was established in 1966 through an Ordinance of the Federal Government of Pakistan. The objectives for the establishment of ICP are:

a) to broaden the base of investments, and

b) to develop the capital market.

The corporation performs the following functions in order to fulfill its objectives:-

a) Underwriting of public issues of shares, providing financial assistance in local currency through purchase of Term Finance Certificates (TFCs) and providing funds for purchase of Locally Manufactured (LMM) under SBP Scheme;

b) Opening and maintaining investment accounts with a view to broadening the base of shares ownership and widening the base of capital market;

c) Floating closed-end mutual funds with a view to providing a medium of pooled investment to small investors in the country;

d) Buying and selling shares of companies listed on stock exchanges with a view to provide strength to the stock market.

The Corporation entertains applications from sponsors for underwriting public issues of shares and for term finance to meet the local currency cost. These funds are provided through the medium of Term Finance Certificates as following Islamization debenture financing was discontinued. Under the Investors' Scheme. The Corporation maintains Investment Account for the purchase and sale of shares of listed companies, with the objective of broadening the base of equity investments. In order to further strengthen its objective, the Corporation introduced the medium of close-end mutual funds in the country which provides an opportunity of pooled investment for small investors. The Corporation has also built-up its investment portfolio by making purchases/sales of shares on the stock market and through underwriting take-ups.

Financing Operations:

The Corporation as a development finance institution arranges local currency funds for the needy industrial projects through purchase of TFCs and also provides funds on concessional terms for purchase of LMM. The Corporation along with its consortium members since inception till June 30, 1990 approved total financial assistance over Rs. 10 billion, of which ICP's own commitments amounted to Rs. 2.8 billion. The assistance arranged by the Corporation covered the important sectors of the economy like cotton textiles, sugar, chemicals & pharmaceuticals, fuel & energy, fertilizer and engineering etc.

Investor's Scheme

The Corporation introduced the Investors' Scheme in 1967 for providing an opportunity to small investors to invest their savings in shares of listed companies. This is the only scheme of its kind, offered by any institution in the country for investment in shares. Following Islamization in 1980, the Corporation introduced two types of Investment Accounts which are called "Sharing Accounts" and "Non-Sharing Accounts". Under the Sharing Accounts Scheme, the Corporation and the Account holders pool their funds jointly, while Non-Sharing Accounts are managed solely with the investors' funds. The total number of Investment Accounts maintained at the nine branch offices stood 11,945 as on June 30, 1990 and the total investments made through these accounts were around Rs. 600 million. The branch-offices of the Corporation are located, at Karachi, Lahore, Rawalpindi, Peshawar, Quetta, Faisalabad, Multan, Hyderabad and Islamabad.

ICP Mutual Funds

It may be added that ICP is the first institution to have introduced closed-end Mutual Funds in the country, through which funds of small investors are pooled together for the purchase of shares with the objective of providing the benefits of large portfolio to fund-holders. The First ICP Mutual Fund was offered for subscription to the general public in 1967. Following its successful launching, the Corporation since then has floated a series of 20 ICP Mutual Funds with total capital of Rs. 340.00 million in one large sized ICP State Enterprise Mutual Fund in 1980 with a capital of Rs. 280.00 million.

The Corporation's ability in managing the Mutual Funds is very well reflected in the soundness of their portfolios, which is evident from the fact that fund holders have been regularly receiving very attractive dividends. The rates of dividends on all the Funds and the SEMF have been increasing and the Corporation paid dividends in the range of 15 per cent and 45 per cent for the year ended June 30, 1991.
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Publication:Economic Review
Date:Oct 1, 1991
Previous Article:Foreign investment: it's role in industrial development.
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