GFH Group looks to sell Faysal Bank stake at 76% premium: report

June 27, 2024 (MLN): Ithmaar Holding is looking to sell 66.7% of the issued and paid-up capital in Faysal Bank Limited (PSX: FABL) at a premium of 76.6% from the current market prices, a report by Topline Securities noted.

Detailed minutes of Ithmaar Holding’s Extra-Ordinary General Meeting (EOGM) released on June 13, 2024, mentioned that, against this stake transfer, Ithmaar Holding will receive $225 million.

“This translates into total valuation of $450m for the Bank, in our view,” Topline Securities stated.

To recall, Ithmaar Holding held its meeting in May to get approval for the transfer of 66.7% of the issued and paid-up capital in FABL to a company entirely owned by Ithmaar Holding, Ithmaar Bank or IB Capital (Faysal Bank JV).

Following the transfer of shares in Faysal Bank to the Faysal Bank JV, 75% of the issued and paid-up capital in the Faysal Bank JV would be transferred to Bahrain-based GFH Financial Group.

This translates into an indirect transfer of around 50% stake,

With the exchange rate of PKR 279 per USD, the market value assigned to FABL bank is Rs126 billion or Rs83 per share. While the current market cap of the bank is Rs71bn or Rs47 per share.

Further, as per the minutes, the transaction is subject to signing of definitive agreements, shareholders, and required regulatory approvals.

The current Price-to-Book (P/B) ratio of the bank is 0.78x, while the transaction rate of Rs83 per share translates into a P/B ratio of 1.38x.

However, Topline Securities said that whether this transaction will trigger the public tender offer under the Securities Act 2015 and Substantial Acquisition of the Voting Shares and Take Over Regulations 2017, is yet to be affirmed.

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