What started out as a grocery store in London some four decades ago has become an internationally diversified conglomerate, with interests in the wholesale foods, cement, financial services and real-estate; Sir Anwar Pervezs Bestway Group has further strengthened its investments in Pakistans banking industry.
When UBL was privatised in 2002, Bestway, along with Abu Dhabi Group (ADG), formed a management consortium for the bank. The bank has been turned around in the seven year period since, into a prestigious profit making enterprise.
As Mian Manshas offer for ADGs share in UBL did the rounds, there were rumours that the Middle Eastern groups $800 million investments were looking for a way out, not just from UBL, but also from Bank Alfalah and telecom businesses in Pakistan.
However, being a party in the consortium, Bestway group had the first right to refusal to ADGs stake sale. In a bid to continue and further strengthen its control over the entity, the UK-based group has inked an agreement with its UAE-based partner, to increase its stake by 20 percent.
Masterfully crafted, the arrangement will allow Pervez to gain 51 percent of the bank and, with it, complete management control. Yet, ADG will only sell 20 percent of its stake, retaining a 10.3 share. Minister Shaikh Mabarak Al -Nahayan will remain the chairman of the board till October 2011.
"Bestway group does not want to lose control of its control in UBL. It seems as if they want to continue with their management that has worked well for them so far," said seasoned banking analyst, Khalid Iqbal Siddiqui, a director at Invest and Finance Securities.
ADG invested $100.5 million for a 25.5 percent stake in UBL in 2002 and further strengthened its shareholding by acquiring a 4.8 percent stake in the GDR issue for $100 million in 2005.
The transaction in question is expected to earn ADG $224 million (240 million shares @ Rs80 per share). According to rough calculations, the divestment will lock in capital gains of about $91.6 million, a 69 percent weighted average gain on the sale of 20 percent shares.
Market expectations were dashed as a notice was circulated stating that no takeover clause would be applicable since the composition of the board and control would remain within the existing consortium.
With news that Bestway group would not be required to make a tender offer to the public, UBLs stock slipped 17 paisas after hitting the upper-circuits the day before.
While there are compelling reasons for ADG to use the proceeds from the sale towards its telecom operator, only time will tell how the capital is redeployed.
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