Nearly two years after its founder and CEO, Zia Chishti, was ousted following allegations of sexual misconduct, The Resource Group (TRG), one of the most traded companies on the Pakistan Stock Exchange (PSX), is caught in a fierce power struggle. Chishti, the former CEO, is now on a mission to reclaim control through a series of aggressive moves. The conflict has reached a critical stage, with Chishti resorting to public appeals and legal battles, attempting to sway minority shareholders to force an Extraordinary General Meeting (EOGM) and initiate a hostile takeover.

Chishti, as TRG Pakistan’s largest individual shareholder, is using his significant stake to attempt to regain control of the company. However, the company’s current board of directors is resisting, relying on the support of other shareholders to fend off Chishti’s push. The matter has escalated to the Sindh High Court (SHC), which has halted any immediate efforts to call an EOGM.

TRG’s Meteoric Rise and Chishti’s Fall

Back in the summer of 2021, TRG Pakistan was thriving. Its shares were among the most actively traded on the PSX, and the company had just announced a 44% dividend in the third quarter of FY 2020-2021, followed by impressive earnings of Rs. 47.4 per share. This success, largely attributed to Chishti, made TRG a popular investment, particularly in the tech sector.

Chishti, who had previously gained international acclaim for inventing Invisalign braces and founding Afiniti, was a rising star in Pakistan. Afiniti, which developed AI software to enhance call-center efficiency, was considered a crown jewel in TRG’s portfolio. Due to Chishti’s Pakistani heritage, he maintained investments in his father’s homeland, using TRG as a global holding company for Afiniti and other ventures.

However, Chishti’s empire began to crumble in November 2021 when a former employee accused him of sexual assault during a congressional hearing in the U.S. This led to his swift resignation from both Afiniti and TRG Pakistan. By January 2022, Chishti was removed from TRG’s board of directors.

Chishti’s Return and Hostile Takeover Attempts

Despite his ouster, Chishti has not quietly faded from the scene. He has made several attempts to regain control of TRG Pakistan, culminating in the current battle. His first move came in October 2022, when he partnered with the JS Group in an effort to take over the company’s board. A lawsuit filed by TRG accused Chishti and his allies of acquiring over 30% of the company’s shares without making a public offer, as required by law. The SHC intervened, preventing the JS Group from exercising voting control over the shares.

Undeterred, Chishti launched another hostile takeover attempt in early 2023, but this too was blocked by the courts. He has since continued his efforts, filing defamation suits against TRG’s current management and running social media campaigns accusing the company’s directors of mismanagement.

The Battle Intensifies

In late September 2023, Chishti escalated his campaign by taking out full-page newspaper advertisements urging shareholders to join him in calling for an EOGM to remove the current board of directors. The ads accuse TRG’s leadership of operational mismanagement, highlighting declines in the value of Afiniti and Ibex, a TRG subsidiary. Chishti claims that the current board, including CEO Aslam, has used TRG’s cash reserves to buy back shares through an opaque subsidiary, Greentree Holdings, allowing them to retain control while the company’s value has plummeted.

TRG’s management, in turn, has dismissed Chishti’s accusations, asserting that any association with him would damage the company’s reputation and value. In an official statement on October 4, 2023, TRG warned that Chishti’s attempts to remove nine out of ten directors and amend the company’s Articles of Association could have devastating consequences.

Shareholding: The Key to the Conflict

At the heart of the battle is control over TRG’s shares. Both Chishti and the current management are working to accumulate shares, knowing that shareholding ultimately determines the composition of the board of directors. Chishti’s group, which includes the JS Group and his wife, holds over 34% of TRG’s shares, while the company has been buying back shares through Greentree Holdings, increasing its stake to nearly 29% by mid-2023.

With board elections not due until 2025, the fight for control of TRG is far from over. Both sides are preparing for what could be a prolonged and bitter conflict, with Chishti determined to regain his position and the current board equally resolute in preventing his return.

For now, TRG’s management remains in control, but Chishti’s relentless pursuit of a hostile takeover continues to pose a significant threat to the company’s stability. The outcome of this ongoing battle will determine the future direction of one of Pakistan’s most prominent companies.