The news of Meezan bank’s stake sale has been heard for quite some time now and BR Research has been watchful of the whole process. However, there came a twist to the story last month when SBP rejected the acquisition offer put forth by a British Virgin Island-based company, Vision Financial Holdings Limited (VFHL), whose source of wealth was not clear to the apex regulator. (See the story: ‘Meezan stake sale: the story behind SBP’s rejection’ published on March 19 for further details).
A lull followed after that, until yesterday when Reuters revealed that an unidentified buyer was acquiring 30 percent stake in Noor Financial Investment Limited (NFIC), the major shareholder of Meezan. That has, raised some eyebrows. Reportedly, Kuwait’s National Industries Group (NIG), the major shareholder of NFIC may sell its stake to this mysterious buyer.
Rumours are circling in the industry that the “unidentified buyer” may well be VFHL, which seems smart enough to have taken another route to get its hands on the largest Islamic bank of Pakistan.
To put things into perspective, NFIC has 49.1 percent stake in Meezan Bank. Besides, it has five other associates and subsidiaries operating in diversified sectors such as investment, drilling and petroleum, logistics, telecom, etc. On the equity front, NIG holds the 51 percent stake in NFIC while 49 percent of its shares are privately placed with the shareholders of NIG.
Now with the NIG selling 30 percent of NFIC, the new buyer will have a share in all the six subsidiaries and associates including Meezan. Since NFIC is the major shareholder of Meezan, the new buyer might get a representation on the board of Meezan.
Bear in mind, previously, VFHL intended to acquire 49.1 percent stake in Meezan for $190 million. And if the rumors of the mysterious buyer being VFHL have any truth, VFHL will be indirectly acquiring 13 percent of Meezan bank for $99 million.
When BR Research inquired the SBP banking policy department about this recent development, it was learnt that if VFHL was barred by the SBP to directly sit on the board of Meezan, it will not be allowed to do the same in a roundabout way either.
Sources revealed that the SBP has put in place strict governance rules for the smooth functioning of banks and DFIs. SBP has a critical Fit and proper test (FPT) criteria for the appointment of the members of Board of Directors, CEO and key executives of banks and DFIs.
So, if VFHL is indeed making an effort to befool the regulator, it will soon face the music.
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