KARACHI: A bee-line of letters flew between the Karachi Stock Exchange (KSE) and the Army Welfare Trust-Fauji Foundation on Friday which went to confirm that the share-purchase deal of Askari Bank Limited (AKBL) was sealed between the prospective buyer, Fauji Foundation and the seller, Army Welfare Trust; the latter currently in control of the majority stake of 50.57 per cent in AKBL.
The agreement was reached on a sale-purchase price of AKBL at Rs24.32 per share.
Earlier letters by the buyer and seller were conveyed to the bourse informing that share purchase agreement was signed by Army Welfare Trust, with Fauji Foundation, Fauji Fertilizer Company Limited and Fauji Fertilizer Bin Qasim Limited (collectively 'Fauji Consortium') for the sale of controlling stake in the Bank to the Fauji Consortium.
The notice was stated to be in compliance with the Listing Regulations of the KSE.
The stock exchange, quick to obtain the 'material information' shot back on Friday: "In consideration of the above being price sensitive and material information, you are advised to communicate us immediately the purchases price of the shares of the Bank, by the Consortium and also communicate us about the fulfillment of the requirements of Listed Companies (Substantial Acquisition of Voting Shares and Takeovers) Regulations, 2008".
Askari Bank then passed on a letter to the Exchange noting the sale and purchase price per share at Rs24.32, which the bank said was subject to the approval of the State Bank of Pakistan.
Askari assured that the Fauji Consortium would comply with the regulations and the deal was subject to the approval of Securities and Exchange Commission of Pakistan.
Askari Bank Limited (formerly Askari Commercial Bank) was incorporated on Oct 9, 1991 as a public limited company. The bank began operations on April 1, 1992.
The SBP had granted approval for due diligence to the Fauji Group in Jan 2012. According to analysts, the deal size could range between Rs12 to Rs16 billion. FFC with strong balance sheet would have no difficultly in raising that kind of money.
The Fauji Foundation (also known as Fauji Group) website says that the Group is amongst the largest business conglomerates in Pakistan which "Earns To Serve" the interests of ex-servicemen and their families. Total assets of Fauji Foundation at the end of 2011 stood at Rs191 billion.
A senior banker said that Askari Bank had the distinction of being one of the few banks in the world that are under the control of the Army. Lt Gen Javed Iqbal HI (M) is currently the chairman of the board of directors.
On Friday, none of the parties disclosed the respective share of the Fauji group companies (FFC, FFBC; FF) in the acquisition deal. In accordance with the rules, following the buy-out, Fauji Group would likely make a tender offer for further 24.7 per cent shares of AKBL from other stakeholders.
The 3Q2012 accounts of the Askari Bank shows that at Sept 30, 2012, the book value of the Bank's share was Rs24.89. Yet, as the acquisition rumour had been circulating since the beginning of last year, the share in Askari had outperformed the KSE-100 index by 8 per cent in 2012.
Total assets of AKBL at the end of third quarter 2012 stood at Rs359 billion. In the nine months to Sept 30, 2012, the bank earned profit after tax of bank at Rs1.474 billion, up from Rs1.004 billion in the same time in 2011. Earlier, for full year 2011, the bank’s profit-after-tax at Rs1.628 billion rose by 73 per cent over the earlier year’s profit of Rs943 million.
The State Bank of Pakistan had granted approval for the sale-purchase and due diligence of Askari Bank early last year. “The share-purchase deal went on a fast-track" said a sector watcher. He thought that the reason could be the absence of a competitive bidder with Fauji Foundation being the sole buyer in the field.