MCB Bank, sponsors of MCB Asset Management Company Limited and shareholders of Arif Habib Investments Limited signed the shareholders' agreement on January 19, 2011 for the proposed merger of their asset management companies. The shareholder agreement was signed by the two companies in the presence of Mian Muhammad Mansha and Arif Habib, who also signed the agreement on behalf of Arif Habib Corporation Limited.
U. Usmani, President MCB Bank signed the agreement on behalf of the bank in the presence of Ali Munir, SEVP of MCB Bank. The two groups had initiated the deal with an in-principle understanding by signing an MoU a few months ago. Further formalities such as submission of legal applications to regulators have followed. On January 19, 2011, the two parties finalised their understanding and agreement on all legal, financial and commercial terms and concluded by signing a shareholder agreement.
Mian Mansha who is chairman of the board of MCB Asset Management, besides being Chairman of MCB Bank, will continue as the chairman of the merged entity representing MCB Bank, which will become the single largest majority shareholder in the merged entity. Citing the quality resource pool now available to the new company, Chairman MCB Bank and MCB-AMC Mian Muhammad Mansha said, "we should leverage the resource pool to rapidly develop the new company and then leave it entirely in the hands of professionals." Arif Habib, Chairman AHIL termed the merger "a great collaboration", added "it would bring diverse benefits to all stakeholders.
Arif Habib Corporation will be the second largest shareholder in the merged entity followed by employees of Arif Habib Investments and general public. The board will have representation of both groups and independent directors. The company is likely to be re-named "MCB-Arif Habib Savings and Investments Limited", or another name agreed by shareholders. The name is likely to have representation of both groups.
The new entity is expected to have a larger capital base of rupees 660 million and MCB Bank will be entitled to receive 1.2 shares of Arif Habib Investments for every one share of MCB Asset Management. Yasir Qadri, currently CEO of MCB Asset Management is proposed to continue as CEO of the new company while Nasim Beg, currently CEO of Arif Habib Investments will serve in the board as Executive Vice Chairman, subject to regulatory approvals.
Arif Habib Investments and MCB AMC are already leading companies of the asset management arena and the merger can potentially make them the largest private asset manager of the country behind the public sector NIT. The merged entity is likely to manage approximately Rs 30 billion, making the managed assets size comparable to some banks. Asset management industry in some parts of the developed world is larger than banks, being the preferred choice for small savers and other investors.
The groups feel strongly about sharing resources to provide better services to a diverse segment of investors ranging from small savers to large, sophisticated investors. The merged entity is likely to have risk averting products such as money market and government securities funds, capital protected funds, somewhat higher yielding fixed income funds, and higher risk reward options such as hybrid funds and stock market funds.-PR
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