The primary regulator of capital markets, Securities and Exchange Commission of Pakistan (SECP) has asked the Pakistan Stock Exchange (PSX) on Thursday to “immediately rescind” the public notice issued on Feb 7 regarding the interest shown by Bahria Town in acquiring a majority stake in Escorts Investment Bank (EIB), as per a notification issued by PSX on Thursday evening.
SECP has objected saying, “No requisite approval has been obtained by EIB or its sponsors with regard to the potential acquirer/investor.” Furthermore, it communicated that any potential acquirer of a non-banking finance company has to obtain prior approval of the SECP under the NBFC Regulatory Framework, including compliance with the laid down rules and procedures.
Financial results have revealed that EIB has a poor balance sheet and financial standing, hence the only apparent reason for the acquisition seems to be of prestige and respectability attached to the transaction.Just last year, State Bank of Pakistan (SBP) had turned down Malik Riaz’s bid of gaining ownership and management control in Burj Bank.
AKD Securities had stated on behalf of Bahria Town that the real estate company, Bahria Town was interested in buying up to 71.16 per cent shares in the relatively small investment bank along with management control.
“Therefore, any public announcement made by AKD Securities in respect of the (possible) acquisition of 71.1pc shares and control of EIB is neither effective nor tenable,” the regulator said. The SECP has also stopped AKD Securities from publishing any content regarding the intent of acquiring the investment bank. In addition, it directed EIB and its sponsors “not to proceed with any arrangement or negotiations in respect of the sale of its majority stake” to Bahria Town without obtaining prior approval of the key regulator of investment banks in Pakistan – SECP.