Ithmaar Holding, the parent company of Faysal Bank Limited (PSX: FABL), held an Extraordinary General Meeting (EOGM) on Wednesday to seek shareholder approval for the proposed sale and transfer of certain assets. This transaction will see Bahrain-based GFH Financial Group acquire a 75 percent stake in Ithmaar Bank, which includes Faysal Bank Joint Venture (Faysal Bank JV).
The shareholders have approved the sale and transfer of assets valued between $695 million and $715 million, alongside liabilities estimated at $665 million to $695 million, according to a brief note from Topline Securities.
Initially, a 66.67 percent stake in Faysal Bank will be transferred to a company wholly owned by Ithmaar Holding, Ithmaar Bank, or IB Capital, collectively referred to as Faysal Bank JV. This transaction is subject to local regulatory approval. Subsequently, 75 percent of the issued capital of Faysal Bank JV will be transferred to GFH Financial Group.
GFH Financial Group is set to receive a preferred annual return of 12 percent Return on Equity (ROE) on a cumulative accrual basis for five years. It remains unclear whether this will lead to a uniform payout policy for Faysal Bank or pertains to a different aspect of the agreement.
The initial transfer of shareholding to Faysal Bank JV aims to facilitate a smooth execution of the transaction without the need for transferring dollars in or out of Pakistan. Ithmaar Holding is effectively selling its stake in Faysal Bank by selling its interest in Faysal Bank JV.
On May 25, 2024, Ithmaar Holding also sold a 5.76 percent stake in Faisal Islamic Bank of Egypt to an undisclosed buyer for $34.8 million. This transaction values the total Egypt Bank at approximately $604 million, suggesting a price-to-book (P/B) ratio of around 1.0x. In contrast, FABL is currently trading at a P/B ratio of 0.74x.
GFH Financial Group, a Bahrain-based financial investment group, has also expressed interest in acquiring Ithmaar’s Financing and Investment Portfolios in various communication exchanges.
At the time of filing, FABL’s stock was trading at Rs. 42.05, down 3.44 percent or Rs. 1.5, with 1.9 million shares exchanged on Thursday.
