Prime Minister Shaukat Aziz has snubbed the Privatisation Commission (PC) for recommending low price over Initial Public Offering (IPO) for Habib Bank shares (HBL), sources in Privatisation Minister''s office told Business Recorder here on Friday.
They said that the PC had recommended the offer price of Rs 195 per share with 5 percent (34.5 million shares) for sale to general public with a minimum lot size of 100 shares. The Cabinet Committee on Privatisation (CCoP), which met on June 12, did not approve the recommendations of the PC regarding HBL IPO, sources said.
" The CCoP directed the PC to resubmit the proposals regarding size and price in the next meeting, to be held on Saturday, June 23 in the National Assembly building, so that the transaction could be completed in July," they added.
They said that the Prime Minister expressed annoyance over presence of some ''strangers'' in the meeting of CCoP which was called to discuss issues of Global Depository Receipts (GDRs) and IPOs of different public sector entities.
"The Prime Minister pinpointed some persons sitting in the CCoP meeting and raised the question as to who had brought them there," said another official. Out of the 690,000,000 ordinary shares issued, the government holds 338,100,000 (49 percent) shares, including 331,524,002 (48.05 percent) shares acquired through State Bank of Pakistan (SBP).
Sources said that the CCoP in its meeting on October 30 last year had approved divestment of SBP shares in HBL through an IPO, which would be followed by GDRs offering in due course of time. The Lead Manager, after carrying out detailed appraisal, had recommended an offer size of 5 percent, with green-shoe option of additional 2.5 percent of total outstanding shares of HBL.
The Lead Manager carried out a comparative valuation analysis by using HBL''s per group (NBP, ABL, MCB, UBL) based upon calculated price/ earning multiples and price/ book value multiples. Based on the analysis of the Lead Manager, the PC calculated the offer price in the range of Rs 175 to Rs 200 per share, which represented a discount range of 11.5 percent to 22.5 percent on the DCF based fair value, sources said.
They said that the PC was of the view that HBL transaction should be at an appropriate time, after the GDR offering on the shares of the United Bank Limited (UBL) as this would have a positive impact on the offering of HBL. According to them, the CCoP in its meeting on Saturday, would also consider GDR offering of UBL as the Prime Minister is of the view that loss of market share is a negative indicator during its privatisation process.