Govt plans roadshows for Habib Bank,eyes $750 million from stake sale

KARACHI: The government plans to open roadshows on March 29 for its stake sales in the country’s biggest lender, Habib Bank Limited, a senior official said on Tuesday, eyeing to tap global institutional and high net worth investors to raise at least $750 million.
“This will be the largest transaction in the history of Pakistan’s capital market and we expect to fetch around $750 million from the entire transaction,” Mohammad Zubair, Chairman Privatization Commission told The News. “We are expecting over 75 percent participation (in the transaction) from the foreign investors.”
The roadshows would be held in Singapore, Hong Kong, US, London, Dubai and Pakistan.
The government owns 609 million shares of Habib Bank, or a 42 percent stake, and it will offer 250 million shares, valuing $500 million, as base shares through the book-building process and the remaining 359.3 million shares will be available under a greenshoe option to be exercised on the basis of investor demand and potentially for offering to multilateral banks.
HBL was privatised in 2003 when a 51 percent holding was sold to the Aga Khan Fund for Economic Development.
The deal is part of an initiative to privatise 68 companies, including 10 banks, and raise $5 billion in the next two years. The government plans to sell dozens of public companies to help stabilise the economy crippled by power shortages, corruption and militant violence.
The government had sold a stake in the United Bank Ltd at a seven percent discount last June and shares in Allied Bank Ltd at a three percent discount in December. In November the commission had suspended a plan to sell shares in the oil and gas Development Company on lower price than expected from international investors, dealing a blow to an ambitious privatization drive.
Zubair said a meeting is due in a couple of days to finalize the date for initiating book-building process and the process is expected to start somewhere around April 10, 2015.
“Pakistan is not a bad story, the economic outlook is not bad while the capital market is performing well and the transaction seems a success,” he added.
Zubair said, greenshoe option would depend upon the demand and most importantly the price offered. “If we do not get the reasonable price, the transaction could be hold. This is not a problem,” he said.
A Finance Ministry announcement earlier said the government of Pakistan intends to divest up to its existing 41.5 percent equity interest in HBL by way of secondary offering to international institutional investors as well as an offering to institutional investors and high-net-worth individuals in Pakistan.
“Shares are expected to be offered through a book building process and the offering would increase the free float of HBL. The first day of trading of the offered shares on the local exchanges is expected before May 2015,” it added.
Privatization Commission last month approved the transaction structure to sell the remaining 41.5 percent of government shares through the book-building process. 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.
According to the approved structure, the shares will be offered through domestic stock exchanges, marketed and sold through a document in compliance with the regulations of the US Securities Act.
The transaction structure also includes potential placement of a significant component of government’s shares to the multilateral development banks.
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.
The bank last month declared full year net profit of Rs 31.8 billion, with consolidated profit after tax, an exceptional growth of 38 percent over 2013.