KARACHI, May 7: First Paramount Modaraba announced on Thursday that it had received 'No Objection Certificate (NOC) from the Registrar, Modaraba Companies & Modarabas, Securities & Exchange Commission of Pakistan , Specialised Companies Division, for merger of First National Modaraba with First Paramount Modaraba.

The merger is to be on the basis of swap ratio of 1:12, according to which one modaraba certificate of First Paramount would be issued in exchange of 12 modaraba certificates of First National Modaraba, subject to the approval of scheme by the High Court of Sindh. First Paramount Modaraba said it had now filed petition with the Court for permission of the merger.

Ever since the Regulators began tightening screws on banks, leasing companies and modarabas to expand their equity base, the country is witnessing a bit of merger & acquisition (M&A) activity.

Several Modarabas have so far merged not merely to comply with the minimum capital requirement, but also to make themselves bigger and stronger to be able to survive in the intensely competitive financial market.

During financial year 2003, the Securities and Exchange Commission of Pakistan (SECP) granted no-objection certificates to the merger proposals of i) Capital Assets Leasing Corporation with International Multi Leasing Corporation; 2) Paramount Leasing Limited with First Leasing Corporation and 3) First IBL Modaraba into First UDL Modaraba.

Moreover, the inter-sector and intra-sector mergers of modarabas were allowed by the High Courts, which included: Second and Third Prudential Modaraba merged into First Prudential Modaraba; First Professional Modaraba merged into Al-Zamin Leasing Modaraba; and First Crescent Modaraba merged with Al-Towfeek Investment Bank Limited.

According to the Annual Report 2003 of the Securities and Exchange Commission of Pakistan (SECP), at June 30, 2003, there were thirty-eight Modarabas in existence with an aggregate paid- up capital of Rs8.31 billion. Total assets of the modaraba sector stood at Rs16.89 billion while the total equity amounted to Rs8.56 billion.