KARACHI: The Secondary Public Offering (SPO) of the government’s residual holding in United Bank Limited (UBL) offered at the ‘floor price’ of Rs155 was declared to have received ‘headline demand’ by the book runners at Rs158, or 2 per cent above the ‘floor’ or minimum price.

A ‘ticker’ running on the website of the Karachi Stock Exchange at 11.45pm announced: “Book runners have received headline demand in excess of the full deal size (base of 160m shares and upsize of 81.9m shares) at Rs158. We have seen strong interest from international and domestic investors in the final hour of book building with over 200 lines currently in the book. Books shut at 9pm Pakistan time.”

The previous midnight, a letter was released to the stock exchanges by the Ministry of Finance, Revenue, and Economic affairs, statistics and Privatisation (Privatisation Commission) in relation to the floor price of the offer for sales of government’s residual shareholding in the UBL had notified: “The Cabinet Committee of Privatisation and Privatisation Commission Board in its meeting held on June 10 (Tuesday) have considered and approved the minimum price/floor price of Rs155 per share for the offer.”

The UBL book building was held on Wednesday starting from 8am and closed at 9pm. The SPO of government’s residual 19.8pc shareholding in the UBL dominated the news flow at the market. The offer comprises 160m shares representing 13.1pc of the total paid-up capital of the bank with an upsize option of additional 81.9m shares representing 6.7pc of the total paid-up capital.

Brokers, investors and market participants had settled down to burn the midnight oil as the process was thought to conclude with final determination of ‘strike price’ and its approval by the Cabinet Committee on Privatisation (CCoP) possibly in the early hours of Thursday.

Most investors speculated that the final price, though surely above the ‘floor’, could be at a discount to the market price. At the close of trading at the KSE yesterday, the UBL stock was tagged at Rs174.23.

Analysts calculated that at the end of financial year 2013, foreign investors held 230m shares in the UBL, which meant that the current offer of 241.9m shares, would double the float of the bank (provided the sponsor do not participate). Investment analysts at Taurus Securities observed: “While the supply/liquidity of UBL in the market will increase, the key benefit will be its rise in weight both on KSE-100 index (from 10th rank to 4th rank) and subsequently in MSCI FM index, which will further increase its demand for fund managers.”

Published in Dawn, June 12th, 2014