ISLAMABAD: The Cabinet Committee on Privatisation (CCoP) on Monday set the floor price at Rs166 per share for the divestment of 250 million of the government’s residual shares in the Habib Bank Limited (HBL).
Privatisation Commission chairman Mohammad Zubair informed the CCoP meeting, presided over by Finance Minister Ishaq Dar, 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.
The government has around 42pc (609.3m) shares in the HBL, the country’s largest private bank, and intends to divest all of them in two phases in return for $1.2 billion.
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 (HNWI).
“The book-building, the CCoP was informed, would start at 9am on Tuesday (today), and conclude at 5pm on Friday (April 10),” said an official statment.
Mr Zubair briefed CCoP regarding the HBL pricing benchmarks, demand of investors at various price levels and other influencing factors as presented by the financial advisers at the Privatisation Commission board earlier and made its recommendations for the price at which the government’s shares in the bank were to be offered.
The PC board and the CCoP would meet again on Saturday (April 11) to approve the strike price based on the final results of the book-building.
In February, the CCoP decided to divest 250m shares, representing 17pc of the total paid-up capital of the bank with an upsize option of up to 359.3m additional shares representing about 24.5pc of the total paid-up capital. A portion of the said divestment may also be offered to multilateral development banks and institutions.
Originally, the government was to offload its 20pc shareholding in the HBL in international capital markets in December 2014, but then it had to delay the transaction.
The offloading of shares in two tranches with a gap of six months is for two reasons. First, there is limited capacity to raise big amounts from international funds in one go for a market like Pakistan. Moreover, the second offering could attract a higher share price.
The Monday’s CCoP meeting was attended by ministers for information, planning, petroleum, commerce, ports and shipping, chairmen of Board of Investment, Privatisation Commission and the Securities and Exchange Commission of Pakistan.