KARACHI, July 23: The Crescent group (Cres Group) on Monday purchased strategic equity interest held by Pak-Libya Holdings Limited in First Leasing Company and Paramount Leasing for Rs175 million, Dawn learnt from reliable sources.

Both publicly traded companies — First Leasing Limited and Paramount Leasing Limited — are already understood to be in advanced talks for merger, which would create “First Paramount”. A week ago, Crescent Modaraba — another Cres group company — had initiated its merger with Altowfeek Investment Bank to form the “First Standard Investment Bank Limited”. Financial sector is abuzz with rumours that the strategy of Cres group — which is headed by Altaf M. Saleem, industrialist and Federal Minister for Privatization — is eventually to combine all of those financial assets: Modaraba (Crescent Modaraba); investment bank (Altowfeek) and the two leasing companies (First Leasing and Paramount) into “Altowfeek Bank”, which would hold three-quarters of a billion rupees in capital and more than Rs8 billion in assets.

Cres Group is believed to have paid Rs10 per share to Pak-Libya for its 56 per cent majority holding in Paramount Leasing, while acquiring the 36 per cent of its stake in First Leasing at Rs5 per share. In the proposed merged entity — First Paramount —, Cres Group would go to hold 52 per cent shareholding. Paid-up capital of First Leasing is Rs272 million and that of Paramount Rs250 million, which takes the combined capital of ‘First Paramount’ to Rs522 million — largest among 32 companies listed on the leasing sector. Interestingly, unlike all other leasing companies, those two are the exceptions where over 80 per cent equity was vested in financial institutions. That was why acquisition of majority stake looked both an easier and a timely strategic move.

The consolidation of such huge financial assets into one entity, would inevitably mean reduction in common overheads and rationalization of personnel. There could be some job losses, but the group is keeping those cards close to the chest. Mehmood Ahmed of Crescent Modaraba is being tipped as the man who would be appointed to oversee group’s interests. Paramount Leasing has seen several CEOs from partners of AMZ Securities including Zafar Iqbal, who now heads Pak-Oman. First Leasing is headed by Khurshid Hadi, founder partner of Taseer Hadi — the accountants firm. Hadi is well-known in the financial world and he has held the post of chairman of Leasing Association of Pakistan and President of Asialease — the governing body of associations of 14 Asian countries. It has to be seen how the Group carves out his role in the giant new company.

Cres Group would have 35 per cent shares with three nominees on a seven member board of directors of First Standard Investment Bank Limited — the amalgamated company of First Crescent Modaraba and Altowfeek Investment Bank. Shareholders in Altowfeek and Crescent Modaraba are to meet at separate extraordinary general meetings on the same day on August 6 at Lahore. Members would be asked “to pass with or without modification the scheme of arrangement for amalgamation”, which would then be forwarded for the approval of the regulators and sanction of the Court.

Similar merger proceedings are likely to begin for Paramount and First Leasing. The swap ratio for First Crescent Modaraba and Altowfeek is quite a secret. But, it is learnt, that in the creation of First Paramount, 3.5 shares of First Leasing would be exchanged for each share in Paramount Leasing.