KARACHI, Oct 11: MCB Bank Limited stated on Wednesday that it had successfully raised $150 million through the issue of 8.6 million Global Depository Receipts (GDRs).

A statement released to the press confirmed that the Bank’s GDR offering had received enormous response with the demand exceeding $700 million from over 50 investors globally.

MCB pointed out that each GDR was priced at $17.40, equivalent to Rs1,056 of underlying four equity shares (Rs264 per equity share). “The GDR was effectively priced at a 0.5 per cent premium to 10-day VWAP and a 2.98 discount to last sale”, MCB said.

Merrill Lynch International had acted as Global Coordinator, sole book runner and sole lead manager for the issue, with KASB Securities acting as financial adviser to MCB.

The bank stated that the GDR represented first such issue for a Pakistani issuer in over 10 years. “Following the offering, MCB will be the first Pakistani company to be listed on the London Stock Exchange for trading on the Professional Securities Markets,” the bank boasted.

MCB was noted to be the second largest listed bank on the Karachi Stock Exchange with market capitalisation of over $2.3 billion; asset base of approximately $5.3 billion and deposit base of $4.3 billion.

An analyst mentioned that thirty overseas banks are listed on the London Stock Exchange and MCB Bank would be another addition and first Pakistani bank on the London bourse.

Muhammad Imran, banking sector analyst at JS Capital Markets, stated that MCB GDR was the fourth to be launched by a Pakistani company and the first one by a Pakistani bank. Issues up until now included those of PTCL (launched in Sept 1994), Hubco (on Oct 9, 1994) and Pakistan Cement, then known as Chakwal Cement (on April 25, 1995).

The analyst calculated that through the issue of the current GDR, 7 per cent or 34.5 million additional shares would be issued by MCB. That would dilute the bank’s earnings by 7 per cent. The GDRs have a conversion option and can be converted into ordinary shares.

However, no holder would be able to convert GDRs into equity shares if such conversion would result in holder beneficially owning 5 per cent or more of MCB’s equity shares. In such a situation, prior approval of SBP would be required.

The successful launch of MCB GDR could be a good tiding for government’s planned offer of five GDRs; those of OGDC, Kapco, HBL, UBL and NBP. “It shows that the foreign investors have keen interest in the corporate sector of Pakistan, particularly in banks,” observed a market participant.