KARACHI, April 12: No one is suggesting that it was premeditated, but the purchasers of the majority stake in Saudi-Pak Commercial Bank (SPCB), a company listed on the stock market, went on to make gains, which clearly were unforeseen by the small shareholders and the general public.

On April 1, the acquisition deal of 425.61 million shares, representing 85.10 per cent equity interest in SPCB, was pronounced ‘done’ at the purchase price of $0.47 per share, aggregating to investment of $213 million. That, in rupee terms, translated to Rs29.30 per share.

But the bank, which announced the completion of transaction with the buyers, identified as consortium of International Finance Corporation (IFC), Bank Muscat, Nomura International and Sinthosis Capital, simultaneously, the same day (April 1) declared a right issue in the ratio of eight-for-ten (80 per cent).

The beauty of it all was that the right offer was made at par value of Rs10, which meant that for the buyers, the cost of acquisition of the controlling stake dropped on average from Rs29.30 to Rs20.72 a share.

In pursuant to the listed companies (substantial acquisitions of voting shares and takeovers) Ordinance, 2002, the bank had offered to purchase 7.302 million shares from the public, representing 1.46 per cent of the bank’s paid-up capital.

Setting aside the allegations of detractors that the buyout of almost entire stake was made by the bank from a Faisalabad shareholder instead of following the pro-rata rule, every small shareholder who managed to exchange a share for Rs29.30, also was glad to have struck a good bargain.

On further accumulation of 1.46 per cent shares from the public, the majority shareholders now command 86.55 per cent stake in the bank, which to them would cost Rs20.72 for each stock. But there is the worry over the 14 per cent shareholding left with the minority shareholders and mainly for those who may want to seek an exit, either for lack of desire or want of cash, instead of subscribing to the right.

The right offer should also gladden the hearts of those who celebrate the inflow of foreign investment, since the country would be richer by another $56 million, which would be received in subscription from the majority stakeholders. That would be in addition to the investment of $213 million initially made to acquire 86.66 per cent shares in the bank.

There is still chatter over the government holding of 34 per cent in the overall share ownership of 68 per cent by Saudi-Pak Investment Company in the bank, which makes some critics look upon the deal more as a ‘privatisation’ transaction, rather than a private affair. If one were to wonder for a moment, whether the sale did fall in the realm of ‘privatisation’, then it follows that the formalities and procedure of privatisation of public entity were overlooked.

SPCB was a subsidiary of the Saudi-Pak Industrial & Agricultural Investment Company (Sapico), a joint venture between the governments of Saudi Arabia and Pakistan. On Sept 15, 2001, Sapico acquired the institution formerly known as Prudential Bank.

No one is likely to bemoan the loss of punters at the stock market, who may have purchased shares in Saudi Pak Bank on the rumours or news of sale of its majority stake, as happens in such cases, on assumption that the price of the stock would climb.

The market value of the share in SPCB has retreated 10 per cent to Rs25.10 on April 10, from Rs27.90 on April 1, when the bank announced the completion of takeover deal and asked the shareholders for cash in the right offer.