KARACHI: A Karachi-based private company engaged in the construction of large-scale infrastructure projects submitted on Friday its public announcement of intention to buy a majority shareholding in Escorts Investment Bank Ltd, an entity owned by real estate developer Bahria Town Ltd.
Arif Habib Ltd will serve as the manager to the offer by RMS Ltd, which wants to buy up to 87.96 per cent shares of the investment bank from Bahria Town through an agreement.
However, under the Listed Companies (Substantial Acquisition of Voting Shares and Takeovers) Regulations of 2017, the acquirer must make a separate “public offer” to buy at least 50pc of the remaining voting shares held by the general public.
Given that the general public and “others” control 12.04pc shareholding in Escorts Investment Bank, RMS Ltd is going to make a public offer for 6.02pc shares going forward.
Even though Escorts Investment Bank has been on the block for some time now, no interested
buyers have so far been successful in concluding the transaction.
The share price of the investment bank rose 19.27pc on Friday to Rs6.19 apiece, which brings the current value of the entire bank to Rs839.3 million.
Bahria Town acquired Escorts Investment Bank in 2017 after the State Bank of Pakistan (SBP) refused to let the real estate developer buy a majority stake in Burj Bank for unspecified reasons.
Burj Bank was a commercial bank regulated by the SBP. On the other hand, Escorts Investment Bank is a non-banking finance company or NBFC regulated
by the Securities and Exchange Commission of Pakistan.
An NBFC faces regulatory restrictions when it comes to raising deposits from the general public. However, it can freely engage in financing activities, including long-term loans to individuals for home building.
Most commercial banks don’t extend home loans for Bahria Town properties given the disputed nature of their land titles. However, being a subsidiary of the real estate developer, Escorts Investment Bank was willing to extend long-term financing to home buyers in Bahria Town.
The bank has been running in loss at least since 2016, according to the readily available earnings data. Its net loss amounted to Rs40m in the first nine months 2022-23 versus Rs52.2m a year ago.
As for the potential acquirer, RMS Ltd is a “traditional construction company” that builds highways, bridges and dams. Its CEO, Zeeshan Ali, controls 70pc ownership while two other shareholders own 20pc and 10pc shareholding each in RMS Ltd.
Earlier this week, the company made another public announcement of its intention to buy a majority shareholding in Baluchistan Wheels Ltd, an auto-part maker listed on the stock exchange.
