KARACHI, Oct 9: MCB Bank Limited (MCB) that has set out to raise around $100 to $150 million in fresh equity from international market in the form of Global Depository Receipt (GDR) has received warm investor response.
The GDR, which is the first in last 10 years by a Pakistani company, is to be listed on the London Stock Exchange.
Market sources said on Monday that subscription/commitment amounting to over $500 million had already been booked. A consortium of Merrill Lynch and KASB had been mandated to place the issue with institutional and retail investors outside Pakistan. MCB - acquired by the Nishat Group in a privatisation deal in 1991 - had first disclosed its plans to sell GDRs on July 3.
The bank officials had previously mentioned approximate ‘pricing’ date to be decided on Oct 9, but the market players with an eye on the developments said that ‘pricing’ could not be ascertained till the evening on Monday (Oct 9).
Senior bank officials were mostly participating in roadshows currently underway in Dubai, Singapore, London, Hong Kong, Boston, New York, San Francisco and Amsterdam. The shows had begun on Sept 25.
Banking sector analysts estimated that at the size of the issue ($100-$150 million) the GDR would increase bank’s paid-up capital by five per cent (one GDR equals four ordinary shares) and would account for an inflow of Rs9 billion. Increased equity will either facilitate the bank to acquire a small local bank or expand its domestic and overseas branch network.
Analysts said that much of the huge foreign portfolio investment this year had gone into the country’s banking sector, because of the sector’s high earnings growth. Listed banks’ earnings soared by 99pc to reach Rs47.5bn ($790m) in the last calendar year 2005. The momentum had continued during the current year with earnings growth of 68 per cent in the 1H2006.
A stock pundit observed that encouraging response to the MCB GDR offering would embolden the government to go ahead with its long contemplated plans to sell GDRs in OGDC; NBP; Kapco and others.
