The United Arab Emirates is preparing to convert $1 billion currently parked as deposits with the State Bank of Pakistan (SBP) into an equity investment linked to the Fauji Foundation, a move that could significantly ease Pakistan’s external financial pressure while boosting foreign direct investment (FDI), according to a Business Recorder report citing informed sources.
This development follows weeks of market speculation triggered by remarks from Deputy Prime Minister and Foreign Minister Ishaq Dar, which led many to believe that Fauji Foundation might sell major stakes in its listed companies—particularly Fauji Fertilizer Company and Mari Energies. However, sources familiar with the deal have clarified that this interpretation is incorrect.
Fauji Foundation currently owns about 45% of Fauji Fertilizer and nearly 40% of Mari Energies. Any large-scale divestment would significantly dilute its ownership and control—something the foundation is not planning to do. Insiders stress that the proposed arrangement does not involve selling off core strategic assets, especially Mari Energies, which is expected to remain outside the deal.
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Instead, the transaction is structured around a newly created investment vehicle or trust, jointly established by the UAE and Fauji Foundation. Under this setup, the UAE will convert its existing $1 billion SBP deposit into an equity stake in the new entity. Fauji Foundation, in turn, will contribute assets of equivalent value, likely in the form of shareholdings in selected group companies at mutually agreed valuations.
As per sources, the assets under consideration may include shares in Fauji Fertilizer Company, Askari Bank, Fauji Cement, and other subsidiaries, but Mari Energies is not expected to be included.
A key financial aspect of the deal involves the SBP creating the rupee equivalent of the $1 billion, estimated at around Rs280 billion, and transferring it to Fauji Foundation for investment through the new vehicle. Importantly, while Pakistan’s gross foreign exchange reserves will remain unchanged, the country’s external liabilities will fall by $1 billion, and reported FDI will increase by the same amount.
If finalized, this transaction would rank among the largest single foreign investments in Pakistan in recent years. Beyond the headline numbers, it is the clear manifestation of renewed confidence from a key Gulf partner and offers Pakistan a rare opportunity to improve its balance sheet without additional borrowing—at a time when economic stability remains a top priority.