Malaysia's largest financial institution, Malayan Banking Bhd (Maybank), signed an agreement with Nishat Group to acquire upto 20 percent of ordinary shares in MCB Bank Limited.
As part of the transaction, Maybank will acquire from Mian Mansha's Nishat Group an immediate 15 percent stake at a purchase price per share of PKR 470 subject to necessary approvals with a right to increase its stake to 20 percent after one year.
The purchase price of PKR 44.29 billion (US $680 million) is based on 11 percent premium of the average of last 30 days trading price of MCB Bank, representing 5.4 times MCB's book value. The existing shares sellers are: MCB Pension Fund 8.05 percent; Adamjee Insurance Company under 2 percent; Nishat Mills Employees Provident Fund 1.5 percent; and 2.5 percent from Mansha family ie Mian Umer Mansha; Mian Hasan Mansha and Muhammad Saleem. A further five percent can be acquired by Maybank from three individual investors.
A press release issued in Kuala Lumpur says: "MCB Bank Limited and Maybank are pleased to announce the signing of agreements today, whereby Maybank will acquire up to 20% of the ordinary shares in MCB Bank Limited ("MCB" or the "Bank") from Nishat Group.
The agreement underlines MCB commitment to enter the next phase of growth by partnering with a leading financial services group thereby expanding its product offering and improving efficiency to better serve its customers. Maybank is the ideal strategic partner given its emerging markets heritage and strong consumer and Islamic banking franchise.
For Maybank, the acquisition is in-line with its strategy, as Malaysia's financial services leader in the region, to build its presence in key growth markets across the region. The transaction represents the largest Foreign Direct Investment into Pakistan in 2008 and the largest ever private sector cross border transaction in Pakistan.
As part of the transaction Maybank will acquire from Nishat Group an immediate 15% stake in the Bank for a purchase price per share of PKR470, subject to necessary approvals. Maybank has the right to increase its stake to 20% after one year.
Maybank is largest bank in Malaysia by assets and by market capitalization. Maybank has total assets of PKR 5,394 billion (US $83 billion), equivalent to a market share of approximately 23% of all commercial banks in Malaysia as of December 31, 2007. The Bank has a customer base of approximately 8.1 million, and a nation-wide distribution network of 450 branches and 2,478 ATMs as of December 31, 2007.
To facilitate close strategic cooperation, Maybank will have the right over time to appoint two Directors to represent its interest on the Board of MCB and will participate in some of the key management committees.
Chairman of MCB and Nishat Group, Mian Mohammad Mansha, said, "We are extremely delighted to have Maybank, the premier bank and financial group in Malaysia, as our strategic partner in MCB. We are confident that the experience and technical services that Maybank will be able to provide to MCB will further strengthen the Bank as it moves forward to affirm its leading position in the Pakistan banking sector. In particular, we look forward to the expertise that Maybank will be able to provide in consumer and Islamic banking, two of the faster growing segments in the market."
Commenting on the transaction, the President of MCB, Atif Bajwa, said, "The business cooperation agreement with Maybank will further strengthen our position to capitalise on the growth opportunities in the Pakistan market. We will be able to expand the services we offer our customers and increase efficiencies across our organisation by sharing our partner's technical expertise in product development and best business practices.
We have identified multiple areas of knowledge transfer which will enhance our existing business strategy, particularly in consumer banking, SME banking and Islamic banking. We are excited by the opportunities that our partnership with Maybank opens up for MCB to diversify our earnings streams both domestically and internationally."
Maybank's Chairman, Tan Sri Mohamed Basir Ahmad, said, "This acquisition, like our recent announcement on BII, will align Maybank with a highly attractive franchise in a high growth and under-penetrated banking market with a large population.
MCB enjoys a leading position in the Pakistan financial sector where it has proven its performance and profitability through consistently high returns on equity and strong net interest margins supported by a low cost funding base."
Maybank's President and Chief Executive Officer, Dato Sri Abdul Wahid Omar added, "MCB is well-regarded for its established nation-wide distribution platform, more innovative, products and respected foreign-trained management team. We are excited about MCB's further growth potential with Maybank alongside as exclusive foreign commercial bank strategic partner."
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