The book-building for the sale of the Government of Pakistan (GoP) holding in Habib Bank Limited (HBL) has start at 9,00am on Tuesday (today), and conclude at 5.00pm on Friday (April 10). The transaction is likely to yield US$1.36 billion if everything goes according to the plan.
His is really the test of the incumbent government if it succeeds in arriving at a decent price. During 2014 the GoP had sold a stake in United Bank Limited at a 7% discount and shares in Allied Bank Limited in December at a 3% discount. The spreads of banking sector faces erosion due to decking interest rate in Pakistan
In a bid to meet loan covenants of International Monetary Fund (IMF), the GoP is required to sell part of its stakeholding in various state owned companies. In this regard the GoP attaches great hope from the sale of its 42 percent stake in HBL, one of the largest commercial banks of Pakistan.
The Finance Minister observed that all out efforts should be made for securing best price for HBL shares as it was a prime financial institution of the country having significant international standing.
The government is also considering selling more than 5% shares of the paid-up capital in the largest bank to a single buyer. It abandoned the earlier plan to issue Global Depository Receipts in the London Stock Exchange as the government could not timely meet the regulatory requirements.
Chairman, Privatization Commission, Mohammad Zubair informed that the floor price of Rs166 was set on the basis of Monday’s opening market price of Rs185 at the Karachi Stock Exchange (KSE) with little over 10 per cent discount. Any bid below the floor price would not be entertained.
With floor price in mind, the government is expected to generate a minimum of Rs41.5 billion at the conclusion of book-building process by this weekend. Originally, the government planned to raise about $600m from the first HBL divestment.
The government has already opened the book-building process. According to the approved offer for sale document (OFSD), the offer of HBL share was being made only through the book-building method to the eligible international and domestic institutional investors and high-net worth individual investors.
HBL is the largest bank of the country in terms of assets, deposits and branch network. Its assets are valued at Rs1.74 trillion and customer deposits are estimated at Rs1.42 trillion.