Acquiring Standard Chartered Leasing: Orix Leasing to pay major stakeholder Rs7.88 per share

Scheme of amalgamation means it will pay Rs666.5 million to Standard Chartered Bank

KARACHI:

Orix Leasing Pakistan will acquire a majority shareholding in Standard Chartered Leasing by paying its major stakeholder Rs7.88 per share, the company said on Thursday.

Standard Chartered Bank Pakistan currently owns 86.4% shares in Standard Chartered Leasing, which offers commercial and auto leasing to small and medium enterprises (SMEs) and retail customers through certificates of investments.



The “scheme of amalgamation” of Standard Chartered Leasing with and into Orix Leasing means the latter will pay a total of Rs666.5 million to Standard Chartered Bank to acquire its entire shareholding in Standard Chartered Leasing.

As for the remaining 13.2 million shares that constitute the rest of the 13.6% stake controlled by minority shareholders, Orix Leasing will pay Rs9.85 per share, it said.

In case all minority shareholders sell their stakes for a total of Rs130.5 million, the net worth of the enterprise will amount to a little more than Rs797 million.

If a minority shareholder turns down the cash consideration of Rs9.85 per share for his stake in Standard Chartered Leasing, Orix Leasing will issue them its own shares instead. Such minority shareholders will receive one share of Orix Leasing against every 6.42 shares of Standard Chartered Leasing that they currently hold.



Earlier in September, Standard Chartered Bank had announced that it wanted to sell its two subsidiaries in addition to divesting 20% stake in Standard Chartered Modaraba.



In addition to selling Standard Chartered Leasing, Standard Chartered Bank decided to sell its 100% shareholding in Standard Chartered Services of Pakistan to Orix Leasing. Standard Chartered Services is a private management company that runs Standard Chartered Modaraba, which is the largest modaraba in Pakistan in terms of total assets.

Standard Chartered Bank owns 20% stake in Standard Chartered Modaraba. The bank owns 10% stake directly and controls another 10% indirectly through Standard Chartered Services of Pakistan.



In an earlier statement, Standard Chartered Bank CEO Shazad Dada had said the divestment will have “no impact” on the bank’s existing operations in Pakistan.

“(The decision) is based on the fact that they are not aligned to our strategic objectives in the country,” the statement quoted Dada as saying. Both Standard Chartered Leasing and Standard Chartered Modaraba are successful businesses in their own right and operate as entirely standalone entities, Dada said, adding the bank remains focused on growing core client businesses of retail, corporate and institutional, commercial and Islamic banking.

The net profit of Standard Chartered Leasing for the quarter ended on September 30, 2015, amounted to Rs14.6 million, which is down 31% from a year ago. A major reason for the decrease in profitability, according to the company, is a decline in the benchmark interest rate by 3% on a year-on-year basis.

Published in The Express Tribune, February 19^th,  2016.

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