Ithmaar Holding, the parent company of Faysal Bank Limited (PSX: FABL), is set to receive $225 million from the sale of a 75 percent stake in Ithmaar Bank (Faysal Bank JV) to Bahrain-based GFH Financial Group. The announcement follows the publication of the minutes from Ithmaar Holding’s extraordinary general meeting (EOGM) held on June 13, 2024.
The EOGM, which took place on May 29, 2024, included an agenda item to discuss and approve the proposed sale and transfer of certain assets and liabilities, pending regulatory approvals.
As background, Ithmaar Holding, Ithmaar Bank, and IB Capital cumulatively own 66.67 percent of Faysal Bank (FABL), collectively referred to as Faysal Bank JV. These shares will be transferred to a Special Purpose Vehicle (SPV), of which 75 percent of the issued capital will be subsequently transferred to GFH Financial Group. This arrangement results in the indirect transfer of approximately 50 percent of Faysal Bank’s stake.
In return for this stake transfer, Ithmaar Holding will receive $225 million, valuing Faysal Bank at $450 million, according to Topline Securities. Based on the exchange rate of PKR/USD 279, this valuation translates to a market value of Rs. 126 billion or Rs. 83 per share for FABL. Currently, the market capitalization of the bank stands at Rs. 71 billion or Rs. 47 per share.
The minutes from the EOGM highlight that the transaction is contingent upon the signing of definitive agreements, shareholder approvals, and requisite regulatory clearances.
Notably, the current price-to-book (P/B) ratio of Faysal Bank is 0.78x, whereas the transaction rate of Rs. 83 per share implies a P/B ratio of 1.38x.
This strategic sale underscores Ithmaar Holding’s commitment to optimizing its asset portfolio and enhancing shareholder value through targeted divestments and partnerships.