HBL's IPO to be largest in Pakistan

 

The HBL’s IPO (Initial Public Offering), which is expected to raise Rs12.2bn, would be the largest offering in Pakistan and it will enhance market capitalisation by over $3 billion, says a brokerage house report.

“HBL’s IPO would be the largest offering in Pakistan in terms of value. Previously, OGDC’s IPO in November 2003, with an offer size of Rs6.9bn ($120.3m), was the largest local offering,” said a JS Research report.

The report said the HBL would enhance market capitalisation by over $3bn.

Since its privatisation in December 2003, HBL, which is Pakistan’s second largest bank in terms of its total assets (Rs565bn or $9.3bn, as on March 31, 2007), has been reaping benefits of country’s booming economy and developing financial sector, the report added.

Accordingly, in the last three years (2004-06), bank’s profitability has improved.

On the asset side, major growth was witnessed in the SME (Small and Medium Enterprise), consumer and agricultural sectors.

HBL, under the privatisation programme of Pakistan, was sold to Aga Khan Fund for Economic Development (AKFED) at a price of Rs22.41bn ($389.7m) for 51 per cent stake in December 2003. The Rs36.08 per share at that time after the reduction in the banks capital in 2004 translates into Rs63.68 per share.

After the takeover, the bank managed to triple its profitability on the back of new management’s aggressive lending policy, restructuring, and efficient deposit mobilisation strategy.

The government is offloading five per cent of its holding (34.5m shares) through local bourses, with a 2.5 per cent (17.3m shares) green shoe option exercisable in case of over-subscription.

The shares are being offered at Rs235 per share.

The bank had 32,770 employees 1991. However, thanks to a drastic reduction in the number of employees in 1997 and a gradual decline from then onwards, the bank touched a low of 14,572 employees in 2006. In 2006 alone, 2,367 employees were retrenched

Although no major change in HBL’s number of branches was witnessed (1,477 branches in 2006 versus 1,470 branches in 2003), administrative expenses of the bank grew by 18 per cent annually in the last three years (2004-06).

 
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