KARACHI: Equity brokerage Arif Habib Ltd (AHL) is planning to shut down its commodity brokerage business, a company official told Dawn on Tuesday.

AHL currently owns 100 per cent shareholding in Arif Habib Commodities Ltd (AHCL), an unlisted subsidiary that deals in commodity brokerage.

“AHL has sought shareholder approval for disposal/winding up of the commodity brokerage subsidiary,” said AHL Director Mohsin Madni.

A publicly traded company, AHL is one of the prominent equity brokerages operating in the country. Its consolidated earnings in 2021-22 were Rs826.3 million, down 60.7pc from a year ago.

The cost and book value of the investment in AHCL was Rs38m at the end of 2021-22. Its net worth as per the latest audited financial statements was Rs90.1m.

Since AHCL is a non-listed subsidiary, its per-share value will be determined by a registered “valuer” having a satisfactory quality control review rating by the Institute of Chartered Accountants of Pakistan after the finalisation of the mode of disposal by AHL’s board of directors.

The amount realised will be utilised by AHL to meet its working capital requirements, according to a resolution passed at the company’s annual general meeting (AGM) held on Oct 15.

According to Mr Madni, commodity brokerage is a “smaller-size business” of the Arif Habib Group. “AHL intends to focus and capitalise its resources more towards its principal line of business in which it sees many opportunities in the near future,” he said.

“Our working capital needs are well met. However, the expected sale proceeds will be utilised in working capital management,” he added.

Separately, the AGM passed another resolution with respect to the sale of another wholly owned subsidiary, Arif Habib 1857 Ltd, to AHL’s non-executive director Nida Ahsan for Rs50m.

Since July 2014, AHL has held 100pc shares of Arif Habib 1857 Ltd, whose principal business includes equity trading and brokerage.

It was incorporated with the intention to bring a foreign investor as its sponsor. However, foreign investors weren’t able to obtain regulatory approvals and licencing from their home country’s authorities.

As per the Securities Brokers (Licensing and Operations) Regulations 2016, AHL is not permitted to have a controlling interest in any other company holding a licence of a securities broker.

Published in Dawn, October 19th, 2022