Anticipation: 25% to 30% is the premium Meezan Bank’s shares may fetch. CREATIVE COMMONS
A British Virgin Islands-based company has expressed interest in acquiring 49.1% shares in Pakistan’s largest Islamic bank, according to a notice sent to the Karachi Stock Exchange on Tuesday.
Vision Financial Holdings has appointed KASB Securities, a Karachi-based investment bank, as the manager to the offer for the acquisition of a significant chunk in Meezan Bank.
Speaking to The Express Tribune, Alternate Research investment analyst Umesh Kumar said he expects the deal to be finalised at a price of Rs47-Rs50 per share, which translates into a premium of 25%-30% over the current share price of Meezan Bank. Therefore, if the transaction takes place, its total size will be around $214-$230 million, he said.
However, other analysts shied away from stating the expected size of the transaction, saying it is too early to predict.
Meezan Bank has issued a little over 1 billion ordinary shares at the face value of Rs10 each. The potential acquirer has shown interest in buying 492.4 million shares, which is equal to the current shareholding of Noor Financial Investment Company in Meezan Bank.
Other major shareholders in Meezan Bank are Pakistan-Kuwait Investment Company (30% stake) and Islamic Development Bank (9.3%). Free-float of the bank constitutes 10% of the bank’s total shareholding structure.
Kumar said the transaction can possibly be carried out in two phases. It may first try to buy stakes from the current sponsors of the bank, which can be followed by a tender offer made to the general public, he added.
According to Topline Securities research analyst Zeeshan Afzal, the Substantial Acquisition Law 2002 states that a potential acquirer has to issue a public offer to the shareholders if it tries to acquire 25%-50% holding in a company.
Responding to a question about the origin and shareholding structure of Vision Financial Holdings, Afzal said the very purpose of maintaining a ‘registered office’ in British Virgin Islands is to stay away from the media limelight by taking advantage of local corporate laws.
However, if carried through, this will be the first-of-its-kind transaction in Pakistan where an obscure company with an unknown history acquires a huge stake in the leading player of Pakistan’s Islamic banking industry.
“We don’t recall any transaction [in Pakistan] in which a company registered in British Virgin Islands was involved,” Afzal remarked.
Bank’s fair value
Kumar believes the fact that the bank’s stock is currently trading on the Karachi bourse at a premium is entirely justified due to the bright prospects of Islamic banking in Pakistan and Meezan Bank’s role as its largest player.
At the end of trading on Tuesday, the stock price of Meezan Bank was Rs40.42 a share after increasing Rs1.92 during the day. For the quarter ended September 30, the bank posted a profit after tax of Rs943.9 million, up 15.2% from the corresponding period last year.
“Therefore, the fair value of the bank is approximately $380 million based on its current share price,” Kumar added.
Published in The Express Tribune, November 20th, 2013.
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COMMENTS (22)
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Vision financial is a cover company for people mega-forbes owned by habib khan - where he got the money from is another story
@S S: Its Mega & Forbes, they have created an SPV in British Virgin Islands, similar to the one created for the acquisition of Pioneer Cement
Yeah its Mega & Forbes in a way. The owner Mr. Habib Ullah Khan has created these shell companies to acquire major stakes in Pakistan. Pioneer Cement through Vision Holding Middle East Limited and Haleeb Foods are the examples.
@Ahmed: You can't outsource the regulation of the Pakistani banking system to Noor financial or Kuwaiti regulators. It is not their job.
Im sure GOP knows what they are doing and will give approvals based on their knowledge and understanding of the acquirer. Certainly a large regulated Kuwaiti company like NOOR Financial would not be negotiating with some non transparent unknown entity. I personally encourage deals of this nature as they uplift the economic image of Pakistan on a global stage. Better news like this than news of deaths, harassment and sectarian violence...
@Mani why you ppls always think negative see your country law-in order situation,economy,inflation,financial crises all of these circumstances i appreciated Vision Group has taken a very bold step it's a good sign for our economy.
@khar: Who cares about Islamic banking? I am worried for depositors, borrowers and the economy of Pakistan as a whole not whether it is Islamic or not. Banks are unlike other businesses. If a bank goes down it affects the entire economy. That is why banks got bailed out at great expense in the west. So we need to be careful about who owns our banks.
I am not sure if this deal will pass through the regulatory authorities, given increased US pressure on SBP to ensure transparency in all financial transaction.
Therefore to allow purchase of an Islamic bank by an unknown entity based in Virgin Island is quite dubious to me and should not get the nod from the regulators.
On a separate note this will not result in any foreign remittance as the payment will be made directly to Noor Financial in Kuwait, bypassing Pakistani interbank market.
@abdussamad oh yes... we instead sell this bank to Taliban... then it will be pure islamic banking.. lol
OOOHHH, really appreciate the efforts of vision group that they are investing huge capital when the foreign companies leaving Pakistan.
As far as my knowledge is concerned, Vision Group is a very big & strong group, strongly committed investor in Pakistan past 15 years with billions invested in economy (largest FDI [Foreign Direct Investment] in the country) both infrastructure (ports/terminals), service sector, shipping & logistics, manufacturing, industry, real estate, energy/utility, FMCG (etc. etc. with over 100k directly / indirect employed & Globally / particularly in South Asia & is now very pleased to add a new investment in their diversification by entering into the financial sector of Pakistan having 8-10 k directly or indirectly employment platform.
@Fact Mega & Forbes is not a multi-national company it's a pakistani based shipping company
@Fact Mega & Forbes is not a multi-national company it's a pakistan based shipping company and see the above subject "A British Virgin Islands-based company has expressed interest in acquiring 49.1% shares in Pakistan’s largest Islamic bank" i don't think so it's Mega & Forbes.
Meezan Bank has a responsibility to its clients to ensure that what ever transpires is clean and above board in keeping with its ' Islamic ' image.........just getting SBP's approval is not enough.
Reminds me of when a Mauritius based company acquired a bank in Pakistan.
I think it is Mega and Forbes which through this Vision Holding have already acquired a cement company and a food product company.
The sponsors are the same as for Pioneer Cement.
I couldnt find an offiical website for this "Vision Financial Holdings". Is there any?
just guess who is behind, may be may be may be, immediate pakistani past boss
Some obscure shell company wants to buy a major share of a decent sized bank in Pakistan? The regulators should block this. Who knows who the real owners are of this shell company. I know we are desperate for foreign inflows but this is dangerous.
Seems foreign sponsors of a local Islamic bank intends to acquire Meezan bank. Nothing bad about it. ..