JS Global Capital to acquire BIPL Securities
It is perhaps the inevitable end to what was once a storied financial institution in Pakistan: BIPL Securities, the equity brokerage arm of BankIslami Pakistan Ltd (BIPL) is likely to be acquired by JS Global Capital, the brokerage firm majority-owned by veteran investment banker Jahangir Siddiqui.
In an announcement sent to the Pakistan Stock Exchange (PSX) on August 25, BIPL announced that it had received an expression of interest in the acquisition of 77.1% of its shares (the portion not owned by the company's parent bank) by JS Global Capital. Unusually for an institution that has its own investment banking division, JS Global is being advised on this transaction by Shajar Capital, another investment bank.
While neither BIPL nor JS disclosed the sale price, the share price of BIPL Securities after the announcement jumped to Rs9.07 per share, which would price the transaction at close to Rs700 million. That transaction is likely to be quite easy for JS Global to finance, given the fact that it is the much bigger firm, with more than three times the amount of revenue, and - as of June 30, 2020 - had Rs1,656 million in cash on its balance sheet.
If the transaction were to go through, it would mark the end of what was once a revered financial institution. While it has a different name and different owners now, BIPL Securities started its life in 1952 as KASB Securities, named after the initials of its founder, Khadim Ali Shah Bukhari, the investment banker and broker whose son, Nasir, was one of Jahangir Siddiqui's closest friends in Pakistan's capital markets industry.
At its peak in the 1990s and 2000s, KASB was one of the biggest names in Pakistan's equity markets, and maintained a research partnership with Merrill Lynch, then the third largest investment bank in the world.
The company was founded in 1952 by Khadim Ali Shah Bukhari, then a neophyte to the nascent securities industry in South Asia. Back then, the idea of corporate brokerage houses was practically nonexistent, and so Bukhari operated effectively as an individual, offering stock trading to clients - both individual and institutional.