UBL GDR offering: PC barred from allowing IFC participation

03 Jul, 2007

Prime Minister Shaukat Aziz has barred the Privatisation Commission (PC) from allowing the International Finance Corporation (IFC), an arm of the World Bank (WB), to participate in Global Depository Receipts (GDR) offering of United Bank Limited (UBL), sources in PC told Business Recorder here on Monday.
"Te CCoP had approved GDR offering of UBL with the condition that the launch size will be 25 percent, instead of 20 percent, and that IFC will not be allocated any share, being an organisation with development mandate and not meant for investment in stocks," they said.
They said that Merrill Lynch and Khadim Ali Shah Bokhari (KASB) Securities Limited, Financial Advisors (FA) for UBL GDR offering, had reported that the transaction was on track for pricing on June 22, 2007.
The FAs were also of the view that there was strong demand of UBL shares, and the existing owners, Abu Dhabi Group and Bestway Group, had each offered to purchase up to 11 percent of the bank's equity (total 22 percent) at the strike price of the GDR offering.
In addition, IFC had expressed interest in purchasing about 3 percent of UBL equity with an investment of $100 million within 60 days of the offering close. However, the Prime Minister did not like investment by IFC in such kind of business, sources added.
"There should be no separate allocation of shares for IFC because it is mandated for development and not for investment in stocks," sources quoted the Prime Minister, who is also the chairman of the CCoP, as saying in his concluding remarks on June 12 in the CCoP meeting.
However, Business Recorder, in its issues of June 27 had reported that Bestway and Abu Dhabi group had acquired UBL GDR worth $200 million, increasing their shareholding to 29.5 percent. Sources said that IFC had also expressed interest to invest $125 million in Habib Bank (HBL) public offering, but the Prime Minister in this case also had directed the PC that there should be no separate allocation for IFC.
The PC informed the CCoP that out of total issued 809.375 million ordinary shares, the SBP owned 360,020,504 shares, comprising 44.48 percent of UBL equity. The CCoP, in its meeting on February 18, 2006 had approved divestment of 10 percent shares, including green-shoe option of 5 percent of the total paid up capital of UBL through a secondary offering.
Subsequently, CCoP on October 30, 2006 approved divestment of UBL shares with the offering size ranging from 14 percent to 20 per cent of equity of UBL through a GDR offering. It may be mentioned here that the government has raised $650.3 million from the sale of UBL's GDRs.

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