Share purchase: Ismail Industries eyes 24.5% stake in Bank of Khyber
Leading confectionery manufacturer desires to take management control in three years.
The share price of Bank of Khyber at the end of trading on Monday was Rs9.75, down 1% from December 31, 2014. PHOTO: REUTERS
KARACHI:
Ismail Industries is looking to acquire almost one-fourth of the outstanding shares of Bank of Khyber, a company official said on Monday.
Speaking to The Express Tribune, a representative of the country’s leading confectionery manufacturer said the company has been accumulating shares in Bank of Khyber through purchases from the open market.
According to a stock exchange filing on Monday, Ismail Industries has now increased its stake in Bank of Khyber to 176.5 million shares, which constitutes 17.6% of the bank’s total issued shares.
Roughly 20% of the outstanding shares of Bank of Khyber consist of free float. This means Ismail Industries now owns more than 88% of those shares of the bank that are available for retail investors to trade through the stock exchange.
With a shareholding of 70.2%, the majority stake in Bank of Khyber rests with the government of Khyber-Pakhtunkhwa.
“We’re looking to acquire a 24.5% stake in the bank within the next three years. We’ll gladly assume management control if the majority shareholder desires so,” the representative of Ismail Industries said while requesting anonymity.
While the confectionery manufacturer is free to acquire as big a stake as possible through stock market purchases, the issue of assuming management control of the bank is a thorny one. Under a stay order imposed by the provincial high court, the Khyber-Pakhtunkhwa government is not allowed to sell the controlling stake in the bank.
Currently one of the eight members of Bank of Khyber’s board of directors belongs to Ismail Industries. Its representation on the board will increase 100% in case the confectionery manufacturer succeeds in acquiring 24.5% shareholding in the bank, the company representative said.
Ismail Industries bought small holdings in Bank of Khyber in as many as 12 instalments between January 13 and February 16.
“Bank of Khyber is different from other banks of the similar size. It’s doing fairly well commercially. It has better deposits and minimal non-performing loans,” he said.
Bank of Khyber is a medium-size bank with over Rs110.9 billion in assets at the end of the third quarter of 2014, the latest period for which official data is available.
Its net profit for the nine-month period ending September 30, 2014, was Rs826.1 million, up 2.4% from the same period of the preceding year.
Forty-four out of its 101 branches throughout the country are dedicated Islamic banking branches, as per the latest financial accounts of the bank.
According to BMA Capital analyst Iqbal Dinani, the gradual accumulation of shares in Bank of Khyber by Ismail Industries constitutes the business group’s ‘strategic entry’ into the banking sector. “It’s a growing bank and is currently trading at a discount,” he said.
The share price of Bank of Khyber at the end of trading on Monday was Rs9.75, down 1% from December 31, 2014. No one from the bank was available for comment despite repeated requests.
Published in The Express Tribune, February 17th, 2015.
Ismail Industries is looking to acquire almost one-fourth of the outstanding shares of Bank of Khyber, a company official said on Monday.
Speaking to The Express Tribune, a representative of the country’s leading confectionery manufacturer said the company has been accumulating shares in Bank of Khyber through purchases from the open market.
According to a stock exchange filing on Monday, Ismail Industries has now increased its stake in Bank of Khyber to 176.5 million shares, which constitutes 17.6% of the bank’s total issued shares.
Roughly 20% of the outstanding shares of Bank of Khyber consist of free float. This means Ismail Industries now owns more than 88% of those shares of the bank that are available for retail investors to trade through the stock exchange.
With a shareholding of 70.2%, the majority stake in Bank of Khyber rests with the government of Khyber-Pakhtunkhwa.
“We’re looking to acquire a 24.5% stake in the bank within the next three years. We’ll gladly assume management control if the majority shareholder desires so,” the representative of Ismail Industries said while requesting anonymity.
While the confectionery manufacturer is free to acquire as big a stake as possible through stock market purchases, the issue of assuming management control of the bank is a thorny one. Under a stay order imposed by the provincial high court, the Khyber-Pakhtunkhwa government is not allowed to sell the controlling stake in the bank.
Currently one of the eight members of Bank of Khyber’s board of directors belongs to Ismail Industries. Its representation on the board will increase 100% in case the confectionery manufacturer succeeds in acquiring 24.5% shareholding in the bank, the company representative said.
Ismail Industries bought small holdings in Bank of Khyber in as many as 12 instalments between January 13 and February 16.
“Bank of Khyber is different from other banks of the similar size. It’s doing fairly well commercially. It has better deposits and minimal non-performing loans,” he said.
Bank of Khyber is a medium-size bank with over Rs110.9 billion in assets at the end of the third quarter of 2014, the latest period for which official data is available.
Its net profit for the nine-month period ending September 30, 2014, was Rs826.1 million, up 2.4% from the same period of the preceding year.
Forty-four out of its 101 branches throughout the country are dedicated Islamic banking branches, as per the latest financial accounts of the bank.
According to BMA Capital analyst Iqbal Dinani, the gradual accumulation of shares in Bank of Khyber by Ismail Industries constitutes the business group’s ‘strategic entry’ into the banking sector. “It’s a growing bank and is currently trading at a discount,” he said.
The share price of Bank of Khyber at the end of trading on Monday was Rs9.75, down 1% from December 31, 2014. No one from the bank was available for comment despite repeated requests.
Published in The Express Tribune, February 17th, 2015.