KARACHI: Owing to a “lack of progress” in the proposed transaction, a group of three investors has formally decided not to proceed with the acquisition of more than 50 per cent shares in Escorts Investment Bank Ltd, a subsidiary of real estate developer Bahria Town Ltd, a bourse filing said on Monday.
The three investors made a public announcement of their intention in March to buy more than 50pc shareholding along with management control in the struggling investment bank.
AKD Securities was to serve as manager to the offer collectively made by Mian Javaid Akhtar, Mian Zeeshan Javaid and Mohammad Ali Kazmi. The first two potential acquirers were engaged in trading, construction, agriculture and import/export businesses. The third potential acquirer worked in commercial banking, insurance, treasury, trade finance, leasing and investment banking.
It’s the second withdrawal of a public announcement of intention to buy shares in the investment bank since the beginning of 2022. In the Jan-March quarter, Manager to the Offer M. Munir M. Ahmad Khanani Securities Ltd also withdrew a public announcement of intention on behalf of a potential investor.
Bahria Town Ltd told investors through Escorts Investment Bank Ltd on May 27 that it was “still desirous to sell its shares of the bank” to the group of three investors, even though it had already terminated the shares’ sale and purchase agreement with them.
According to a preceding notice signed by Malik Riaz Hussain of Bahria Town Ltd on May 1, the potential investors were required to fulfil certain conditions precedent — an event that must come to pass before a specific contract is considered to be in effect. “The purchasers have not made any progress to seek the required regulatory approvals and fulfil the conditions precedent,” the May 1 notice said.
Most commercial banks don’t extend home loans for Bahria Town properties given the disputed nature of their land titles. However, being a subsidiary of the real estate developer, Escorts Investment Bank was willing to extend long-term financing to home buyers in Bahria Town.
Bahria Town Ltd owns 87.9pc of Escorts Investment Bank while the general public and “others” control stakes of 10.2pc and 1.8pc, respectively.
The share price of the investment bank decreased 4.36pc on Monday to Rs5.27 apiece. The total value of the bank based on the current share price is Rs714.6 million.
According to its annual financial accounts, the bank generated more than 27pc of its “total income” in 2020-21 via house finance activities.
The bank has been running in loss since 2016, the earliest year for which earnings data is readily available. Its net loss amounted to Rs81.4 million in 2020-21. In the latest quarter, the bank’s net loss was Rs17.1m versus a loss of Rs20.9m a year ago.
Published in Dawn, September 13th, 2022
