Orix Leas­ing set to buy Rs 666 mil­lion shares to merge StanChart sub­sidiary

The Pak Banker - - FRONT PAGE - Muham­mad Yasir

Orix Leas­ing Pak­istan board of di­rec­tors has ap­proved the amal­ga­ma­tion scheme of Stan­dard Char­tered Leas­ing Com­pany within the com­pany against the share price of Rs 7.88 to Stan­dard Char­tered Bank of Pak­istan hav­ing 84 mil­lion shares in its sub­sidiary.

In an ex­tra­or­di­nary gen­eral meet­ing of its share­hold­ers, the leas­ing com­pany of­fered share price of Rs 9.85 to mi­nor­ity share­hold­ers in­clud­ing op­tions to be part of a merg­ing com­pany with one share will be equal of their pre­vi­ous 6.42 share.

The mi­nor­ity share­hold­ers in­clude seven in­vestors with stakes of 2,370 to­tal­ing 16,590.

Orix Leas­ing Pak­istan signed a sale pur­chase agree­ment with Stan­dard Char­tered Bank of Pak­istan to buy and merge its two sub­sidiaries---Stan­dard Char­tered Leas­ing Com­pany and Stan­dard Char­tered Mu­daraba in Septem­ber 2015.

Ac­cord­ingly, two lend­ing com­pa­nies prin- cipally agreed on amal­ga­ma­tion process on the com­ple­tion of fi­nan­cial due dili­gence process in re­la­tion to a di­vest­ment of its share­hold­ings in Stan­dard Char­tered Mo­daraba ( SCM) hav­ing 20per cent stakes and Stan­dard Char­tered Ser­vices of Pak­istan (SCSP) with 100per­cent stakes.

The man­age­ment of Stan­dard Char­tered Bank has de­cided to con­cen­trate on its core bank­ing op­er­a­tion while re­liev­ing out its busi­ness of fi­nan­cial ser­vices through amal­ga­ma­tion of a sub­sidiary, Stan­dard Char­tered Leas­ing Com­pany with Orix Leas­ing Pak­istan Ltd, and di­vest­ment in Stan­dard Char­tered Mo­daraba.

The deal will be sealed once it re­ceives a nod from Se­cu­rity and Ex­change Com­mis­sion of Pak­istan (SECP).

An­a­lysts opined the amal­ga­ma­tion of Stan­dard Char­tered Leas­ing with Orix Leas­ing will bode well for Stan­dard Char­tered Bank as it will boost up its ca­pac­ity of deal­ing with tough fi­nan­cial chal­lenges in­clud­ing earn­ing.

Stan­dard Char­tered Leas­ing sub­sidiary is one of the lead­ing leas­ing com­pa­nies in Pak­istan, cater­ing pri­mar­ily to SME and retail cus­tomers, of­fer­ing com­mer­cial and auto leas­ing and in­vest­ment op­por­tu­ni­ties through cer- tifi­cate of in­vest­ments.

In nine months of 2015, the com­pany profit squeezed to Rs 14.59 mil­lion in Jan to Sept as com­pared with Rs 21.15 mil­lion show­ing a de­cline of 31 in profit. Dur­ing the pe­riod, Net In­ter­est In­come of the Com­pany dropped by 25% from Rs. 123.98 mil­lion in cor­re­spond­ing quar­ter of the last year to Rs. 92.84 mil­lion, in the quar­ter ended 30 Septem­ber 2015. The ma­jor rea­son for this de­crease, which is im­pact­ing the bot­tom line as well, is de­crease in in­ter­est rates by 3% dur­ing the cur­rent pe­riod com­pared to cor­re­spond­ing quar­ter of the last year.

A re­duc­tion in fi­nance cost and ad­min­is­tra­tive ex­penses, sup­ported by ef­fi­cient re­cov­ery ef­forts that re­sulted in re­ver­sal of pro­vi­sion for doubt­ful leases com­pared to charge dur­ing the cor­re­spond­ing quar­ter of last year, com­pen­sated drop in rev­enue to some ex­tent.

The com­pany main­tained over­all bal­ance sheet foot­ing with an in­crease of 1.5% in net as­sets, dur­ing the quar­ter, through proac­tive man­age­ment of as­sets and li­a­bil­i­ties, de­spite spe­cial cir­cum­stances and re­lated chal­lenges af­ter an­nounce­ment of Amal­ga­ma­tion Agree­ment for merger of the Com­pany with and into an­other leas­ing Com­pany.

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