Acquisition of majority stake in Saudi Pak: offers may be four times its Rs eight per share book value

Over half a dozen buyers are expected to give offers for acquisition of majority interest in Saudi Pak Commercial Bank Limited (SPCBL) on Monday, June 25, 2007.
According to informed sources, Noor Group of Kuwait; Arif Habib-Rupali Bank; Commercial Bank of Kuwait; Orascom Group of Egypt; Shaukat Tarin Consortium Consisting of Bank of Muscat, Namura Securities (Japan) and ACTIS (UK); KASB Capital and others have shown interest in acquiring 66 percent stake of Saudi Pak Investment Company (JVC of Saudi-Pak government) Limited along with 22 percent shareholding held by JK Fabrics (Faisalabad) and the balance held by the public.
Saudi Pak Commercial operates 50 branches and another five branches are scheduled to open shortly. The bank primarily enjoys corporate and commercial clientele with a deposit base of Rs 50 billion; advances portfolio is Rs 33 billion and provision for bad and doubtful debt is said to be Rs 2.7 billion.
Saudi Pak requires injection of Rs 6 billion to supplement its paid up capital of Rs 5 billion in order to expand business and buy technology and diversify into consumer banking. The book value of Saudi Pak is at Rs 8 per share. If recent acquisitions of banks are taken as a guide, the offers for the bank will be above from Rs 32 per share, ie at least four times its book value.
Some bidders, however, have objected to methodology being used for the sale of management stake. They feel a high but non-serious bid could derail the process when a serious bidder refuses to increase his offer and match the non-serious bid. News of sale of Saudi Pak Commercial has stirred up trading in its share to hit the upper-lock in daily trade. On Friday, the bank's share price was trading at Rs 24 per share.