Investors Consider Stake in Escort Bank of Bahria – Business
KARACHI: A group of three investors has publicly announced its intention to acquire more than 50% of the capital as well as management control of Escorts Investment Bank Ltd, a subsidiary of the real estate developer Bahria Town Ltd.
According to a filing on Friday, AKD Securities will be the manager of the offer made collectively by Mian Javaid Akhtar, Mian Zeeshan Javaid and Mohammad Ali Kazmi. The first two potential buyers carry out trading, construction, agriculture and import-export activities. The third potential acquirer worked in commercial banking, insurance, treasury, trade finance, leasing and investment banking.
Although potential acquirers are considering a stake of more than 50% in the investment bank, the precise level of expected shareholding as well as the exact size of the transaction cannot be determined at this stage.
Under the Listed Companies (Substantial Acquisition of Voting Shares and Acquisitions of Control) Regulations 2017, potential acquirers are required to make the offer at the highest of five possible rates, including the six-month average price. month, the average price over four weeks and the price based on the net asset value calculated by a chartered accountant.
In addition, acquirers must make a separate offer to acquire at least 50% of the remaining voting shares held by the general public.
Bahria Town owns 87.9pc of Escorts Investment Bank while the general public and ‘others’ control stakes of 10.2pc and 1.8pc respectively.
The investment bank’s share price rose 14.29% on Friday to Rs8 apiece. The weighted average price during the four weeks preceding the date of the public announcement of the intention was 7.15 rupees per share.
Bahria Town acquired Escorts Investment Bank in 2017 after State Bank of Pakistan (SBP) refused to let the property developer buy a majority stake in Burj Bank for unspecified reasons. Burj Bank was a commercial bank regulated by the SBP. On the other hand, Escorts Investment Bank is a Non-Banking Financial Company or NBFC regulated by the Securities and Exchange Commission of Pakistan.
An NBFC faces regulatory restrictions when it comes to collecting deposits from the general public. However, it may freely engage in financing activities, including long-term loans to individuals for housing construction.
Most commercial banks do not provide mortgages to properties in Bahria town given the disputed nature of their land titles. However, being a subsidiary of the property developer, Escorts Investment Bank was willing to provide long-term financing to home buyers in Bahria Town.
According to its annual financial accounts, the bank generated more than 27% of its “total income” in 2020-21 through internal financing activities.
The bank has been posting a loss since 2016, the last year for which earnings data is readily available. Its net loss amounted to Rs81.4 million in 2020-21.
Posted in Dawn, March 12, 2022