Consortium Led By MCB Offers Rs. 8.5 Billion For 51 % Share In UBL
Islamabad, June 10, 2002
The bid opening ceremony for 51 % GoP divestiture in United Bank Limited (UBL) was held here today under the supervision of Federal Minister for Privatisation, Mr. Altaf M. Saleem, and other PC Board members. The Consortium of Muslim Commercial Bank & Associates were the highest bidders offering Rs. 8.5 billion (Rupees eight billion five hundred million) for the 51 % GOP stake. UBL, much like Pak Saudi, is a landmark transaction and is the first major privatisation in the financial sector since Habib Credit & Exchange (completed in 1997).
There were three pre-qualified bidders, namely the Consortium of Abu Dhabi Group (UAE) & Bestway Holdings Limited (UK) c/o Bank Alfalah Limited, the Consortium of Muslim Commercial Bank & Associates and the Consortium of Union Bank Limited & Associates, who participated in the bidding ceremony. Each party placed their sealed bid in the transparent bid box and witnessed representatives from the press opening each respective bid alphabetically and announcing the results. The Consortium of Abu Dhabi Group and Best Way Group's offered Rupees four-billion-eight-hundred-million and Consortium of Union Bank and Associates' offered Rupees four-billion-five-hundred-million.
Bidding results have been forwarded to the State Bank of Pakistan for their review. Upon receipt of the SBP's report, the Privatisation Commission Board will finalise its recommendations for approval/disapproval to the CCOP and hopefully finalise the transaction within 30 days.
All three parties were provided with a detailed Information memorandum and were allowed to conducted their own due diligence. Two pre-bid conferences were held on 18 April 2002 and 23 May 2002, where bidders queries and questions were answered and where appropriate their suggestions were accommodated. In case that the Commission considers the highest bid received unacceptable, the highest bidder would be asked to increase the bid price to an acceptable level. In case the highest bidder is not able to increase the bid price, the second highest bidder would be given the opportunity to increase the bid price and so forth with the third highest bidder as well. The final authority to approve / reject any bid is the CCOP. Upon CCOP approval, a Letter of Acceptance (LOA) will be issued to the successful bidder. The PC will facilitate and support early closure of the transaction upon full payment of the approved price.
In response to press inquiries regarding the valuation of UBL, Minister Saleem stated that the PC’s objective is to maximum proceeds for the GOP. The Minister took the opportunity to highlight the fact that upon successful completion of the UBL transaction, 9% of the overall banking business would shift from the public sector to the private sector (currently 58% the overall banking business is in the private sector) and that the GOP’s goal is have a 100% private sector modus operandi.
The UBL transaction incorporates the broad policy objectives of the Government, including utilisation of the private sector as the primary engine of economic growth and employment. One of the main objectives is to further strengthen the sound and efficient banking system with the capacity to mobilize savings effectively and allocate them to the most economically productive uses. UBL's importance within Pakistan's financial landscape is significant. As the 4th largest Bank in Pakistan, UBL has a 9 % market share with 1,101 branches domestically and 16 international branches throughout the US and Middle East, a subsidiary in Switzerland, offices in Egypt and Iran, a 55 % stake (including management control) in a UK based joint venture which boasts 7 branches, and a 25 % stake in a Oman based joint venture.
