June 27, 2008	Friday	Jamadi-us-Sani 22, 1429

KARACHI, June 26: Maybank of Malaysia has finally acquired 15 per cent MCB Bank shares and remitted a total of $667 million to Pakistan.

The confirmation of acquisition of 15 per cent MCB shares was sent to Karachi Stock Exchange. The deal was finalised on May 5.

According to State Bank of Pakistan, the deal amount worth $667 million was remitted to Pakistan on June 23.

As per agreement, the Maybank would also purchase another five per cent shares of MCB Bank after a year. In terms of deal price, it was the largest deal any bank in Pakistan has ever made to sell its 15 per cent shares.

Maybank bought the MCB stake at 5.1 times book value and 15 times Karachi-based bank’s earnings in 2008. The booming banking industry attracted a number of large foreign banks to enter Pakistan which resulted into sale of several small and medium-sized Pakistani banks.

However, the deal was different as it was the first Malaysian investment in the financial sector of Pakistan.

The transaction of $667 million represents the largest Foreign Direct Investment into Pakistan in 2008 and the largest-ever private sector cross-border transaction in the country.

With the transaction of MCB sale money, the country’s reserves improved significantly after facing a continuous decline for the last 10 months.

The said amount was not remitted to State Bank, but kept with banks which improved reserves to $2.63 billion while the country’s total reserves reached $11.286 billion on Thursday.

The government has also planned to sell shares of public sector companies in the international market for attracting foreign investment.

Plan for launching Global Depository Receipts (GDRs) is also in the pipeline but the instable political and economic image of the country is the real hurdle.

After acquiring 15 per cent shares, the Maybank would have the right to appoint two directors to represent its interests on the Board of MCB and would participate in some of the key management committees.

According to the details, Maybank has signed SPAs (Share Purchase Agreements) with five separate parties, namely 1) Mian Umer Mansha, Mian Hassan Mansha, Mohammad Saleem (collectively referred as individual sellers); 2) MCB Bank Employee’s Provident Fund; 3) MCB Bank Provident Fund; 4) Nishat Mills Limited (NML) Employee Provident Fund Trust; and 5) Adamjee Insurance (AICL) for acquisition of 94.2m shares (15 per cent of issued share capital) of MCB bank at per share price of Rs470. This is 5.3 times its Dec 31, 2007, book value of Rs88 per share.

After completion of the SPAs, the Maybank and the MCB would also enter into a business cooperation agreement, which includes Islamic banking, retail banking, credit cards and small and medium enterprise banking as key partnership areas.

Maybank is the largest bank of Malaysia and is expanding its foreign operations to exploit the opportunities the way other giant banks, like Standard Chartered, ABN Amro, NIB Bank others are doing.