KARACHI: The Sindh High Court has dismissed the applications that sought to block the attempt by JS Bank Ltd to acquire majority shares and control of BankIslami Pakistan Ltd (BIPL), according to a brief note issued by the potential acquirer on Tuesday.
The applications to block the proposed deal were submitted by Muhammad Ayub Tareen, Mohsin Balgamwala, Asif Mannan, AKD Investment Management Ltd and others. The complainants maintained that one business group couldn’t control more than one bank under the prevailing regulations.
Separately, JS Bank submitted on Tuesday a public announcement of an offer to acquire 275.9 million shares of BIPL constituting 24.9 per cent shareholding of the Islamic lender at Rs23.99 apiece.
The public offer follows three separate share purchase agreements with BIPL sponsors for 470m shares constituting a 42.4pc stake. The arrangement stipulates that JS Bank will issue its 1.13 ordinary shares as consideration for every share of BIPL. The acquirer will issue these new shares to the sellers as “other than cash and other than rights” at the given swap ratio.
The acquirer already holds 86.3m shares representing a 7.8pc stake in the target company.
The stated reason for the acquisition of BIPL by JS Bank is that the latter doesn’t have an Islamic banking window or operations. The acquisition will enable the acquirer to make BIPL, a full-fledged Shariah-compliant lender, a subsidiary and benefit from dividend income as well as the expected growth in Islamic banking.
BIPL will continue to operate as an independent Islamic banking subsidiary of JS Bank after the transaction.
The total amount of consideration will be Rs6.6 billion in case the public offer by JS Bank to buy 24.9pc shareholding of BIPL is fully accepted by its ordinary investors.
The share price for the public offer (Rs23.99 apiece) was determined by a chartered accountancy firm based on BIPL’s net asset value — a method of valuation that yielded the highest rate out of the five possible methods prescribed in the takeover rules.
JS Bank will send offer letters to all shareholders except the ones who’re party to the already signed share purchase agreements. The shareholders will then be required to send back their acceptance letters to Next Capital, which is the manager of the offer, by Aug 21.
The share price of JS Bank rose 4.7pc to Rs4.89 apiece on Tuesday while the increase was 7.5pc in the rate of BIPL, which closed at Rs17.76 a share.
Published in Dawn, June 28th, 2023
