KARACHI, Aug 13: First Leasing Corporation Limited told the stock exchange on Tuesday that three nominee directors of Pak Libya Holding Company had been replaced by nominees of the Crescent group.

The decision of the Board taken at the meeting on Monday, went to confirm the July 23 report by Dawn that the Cres Group had purchased strategic equity interests held by Pak-Libya Holdings Limited in two leasing companies — First Leasing Corporation and Paramount Leasing Company for cash consideration of Rs175 million. Probably unaware of the undercurrents, the local management of First Leasing had expressed ignorance about the transaction to an earlier query by the stock exchange. Paramount Leasing had said that the matter was under discussion.

Dawn has learnt that similar changes on the Board of directors of Paramount would be made at the meeting of its board scheduled for August 27.

Both publicly traded companies — First Leasing Limited and Paramount Leasing Limited — are in advanced talks for merger, which would create “First Paramount”. Cres Group, is understood to have paid Rs5 per share to Pak-Libya for its 36 per cent stake in First Leasing, while acquiring the 56 per cent majority holding in Paramount Leasing at Rs10 per share. The group would probably be able to induct four nominees on the seven-member board of directors of Paramount, on August 27. When the proposed merger of Paramount with First Leasing is completed, the Crescent group would go to hold 52 per cent equity in the merged company — First Paramount Leasing Company.

Paid-up capital of First Leasing is Rs272 million and that of Paramount Rs250 million, which takes the combined capital of ‘First Paramount’ to Rs522 million — largest among 32 companies listed on the leasing sector. Interestingly, over 80 per cent equity in both leasing companies was vested in financial institutions, which was why acquisition of majority stake looked both an easier and a timely strategic move.

At separately held extraordinary general meetings on August 6 at Lahore, shareholders in two other listed entities — Altowfeek Investment Bank and First Crescent Modaraba gave their approval to the scheme of arrangement for amalgamation of the two companies into the “First Standard Investment Bank Limited”. Cres group would hold 35 per cent shares and place three nominees on the seven member board of the First Standard Investment Bank Limited. The strategy of the Cres group appears to be to combine the modaraba, investment bank and the two leasing companies, into a kind of financial super market: “Altowfeek Bank” which would hold three-quarters of a billion rupees in capital and more than Rs8 billion in assets. Things appear to be progressing according to plans for the group. But in the race to be the biggest in the financial sector, there are other equally fierce competitors: PICIC and the Mansha group are the two more openly in the race. Through mergers & acquisitions including aggressive biddings on privatization of state-controlled banks, major groups and business houses are vying to tower above the rest in the financial sector. As regulators push for consolidation by prescribing huge equity deadlines, more mergers and takeovers among investment banks, modarabas and leasing and insurance companies would be inevitable. If the Privatization Commission is able to keep up to its targeted sale of UBL, HBL, NIT and ICP before the year is out, it won’t be too long before the dust settles and from among the various contestants, the group that is to be the king of the country’s financial sector, emerges fully into view.