Acquisition of NIB right shares: Country receives $97.5 million from Temasek Singapore

Country has received some $97.5 million sent by "Temasek Singapore" for acquisition of NIB Bank's right shares under its plan to raise a paid-up capital of the bank up to Rs 40 billion, banking sources told Business Recorder on Monday.
They said that NIB Bank is going to launch Initial Public Offer (IPO) of right shares for the existing shareholders from November 27 to December 28, 2008. However, NIB's holding group Temasek Holding Company Singapore is expecting poor response from the small shareholders in the wake of current worst situation in stock market. Therefore, Temasek has sent some $97.5 million in advance for acquisition of the right shares, which received in interbank market, they added.
NIB Bank had announced on October 24 to issue right shares worth Rs 12 billion (approximately some $152 million), which would be offered to all existing shareholders at the ratio of 42.198 right shares for every 100 shares held at the close of business on November 19, 2008, and would be issued at a subscription price of Rs 10 per share.
The issuance of right shares was approved by the Board of Directors of NIB Bank during its 27th Board Meeting held on October 24, 2008. The basic aim of the move is to increase NIB's paid-up capital up to Rs 40 billion for the support and growth of business, besides making NIB top bank in terms of paid-up capital in the country.
Sources said that at present NIB's share's market price stood at Rs 8-9 per share, while in few cases it is also available at lower price than the market. It is excepted majority of small shareholders would not accept NIB's right shares offer due to the prevailing economic situation and it is most likely that NIB holding company, Temasek, would purchase 100 per cent of the right shares being issued, they said.
"Therefore, Temasek (the major shareholder of NIB) fulfilling its commitment has sent first tranche of some $97.5 million for the subscription of the right shares if are not subscribed by other shareholders," sources said.
Sources said remaining amount of some $55 million is expected to be received after the IPO, probably in January 2009. The purpose of the Right Issue is to bolster NIB's capital to meet the challenges and opportunities it likely face during the next few years, they added.
The Right Issue would also enable the bank to meet the SBP's current and future's capital targets. Sources said that NIB had already increased its capital base to Rs 18 billion in the third quarter of 2007 through a 555 per cent Right Issue to acquire PICIC and its subsidiaries.
It is to be mentioned here that Fullerton Financial Holdings owned NIB 63.15 percent shares of NIB, which is a 100 per cent subsidiary of Temasek Holdings of Singapore, an investment company with global investments of $134 billion in diverse companies in financial services, real estate, transportation and logistics, telecommunications, media, health care, education and technology.