Acquisition of Khushali Bank at PBV of 1.47x
The consortium comprising UBL, Incofin Investment Management, Shorecap II Limited, ASN-NOVIB Microkreditfonds and Credit Suisse Microfinance Fund, has acquired Khushali Bank, the country’s largest microfinance bank, at PKR20.44/share representing a PBV of 1.47x. UBL’s stake has now risen to 29.69% and it will require an investment of PKR626mn by UBL.
Small one-time gains
NBP, MCB, ABL besides SCB, AKBL, CITI, HMB, FABL, KASB, SILK, and SMB sold their stakes while HBL, BAHL and SNBL continue to hold their stakes in KBL. Treated as non-earning asset in their books, the sale will result in 1.5-2% impact on MCB and NBP’s earnings for the year while the other banks will also book small gains.
UBL synergies to pay off
It is pertinent to note that UBL holds the largest share in agri finance in the country (25% as of Dec-11) followed by HBL (17%) and NBP (16%). Acquisition of KBL will likely bring further efficiencies in the segment in addition to providing the bank with an established network for OMNI transactions. UBL currently trades at CY12E PBV of 1.1, offers a dividend yield of 10.1% and an upside of 1.4% to our PT of PKR78. HOLD.
(Elixir)
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