Ithmaar Holding, the parent company of Faysal Bank Pakistan, held its EOGM today to get the approval of its shareholders for the proposed sale and transfer of certain assets, approximately US$695-715mn, and liabilities, US$665-695mn.

The agenda, as mentioned above, included the following, among others;

Faysal Bank Pakistan: A 66.67% stake of Faysal Bank will initially be transferred to a company entirely owned by Ithmaar Holding, Ithmaar Bank or IB Capital (termed Faysal Bank JV), subject to local regulatory approval. 

After this, 75% of the issued capital of Faysal Bank JV will be transferred to GFH Financial Group. Click here to read the notice. https://feeds.dfm.ae/documents/2024/May/06/e66d7aaa-7634-4ad7-a90d-e782ade98e1a/EGM%20Circular%20ENG%20vF3Clean.pdf 

GFH shall receive a yearly preferred return of 12% ROE on a cumulative accrual basis for five years. We await further clarity on this clause to see whether it will result in Faysal Bank’s uniform payout policy or if it pertains to something else.

In our view, transferring shareholding first to Faysal Bank JV facilitates the smooth execution of this transaction without bringing/taking dollars inside/outside Pakistan. Please note that Ithmaar Holding indirectly sells Faysal Bank shares by selling its stake in Faysal Bank JV.

On May 25, 2024, Ithmaar also sold a 5.76% stake in Faisal Islamic Bank of Egypt to an unknown buyer against a consideration of US$34.8mn. This takes the total Egypt Bank value to US$604mn, suggesting a P/B of approx. 1.0x.

Meanwhile, Faysal Bank is currently trading at a P/B of 0.74x.

GFH is also a Bahrain-based financial investment group. Through various communications to exchange, they have also highlighted their discussions to acquire Ithmaar’s Financing and Investment Portfolios.

Courtesy – Topline Research