Fauji Foundation has officially approached Silk Bank seeking an interest to acquire a major shareholding in the bank, according to the official notification issued to Pakistan Stock Exchange (PSX).
The management of the Silk Bank has informed its shareholders that its board of directors decided to give in-principle approval to Fauji Foundation to conduct due diligence to evaluate the information and operation details of the bank.
However, a green signal is required from the State Bank of Pakistan to carry out the exercise of due diligence to Silk Bank.
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Silk Bank had been running in losses for the past few years. However, its income statement finally came in the profit during 2020, which stood at Rs. 151 million by the end of three quarters of the outgoing year.
The bank faced an issue of shortage of required paid-up capital for many years, despite the capital injection of the sponsors.
At present, Arif Habib Corporation held a shareholding of 28 percent. It is followed by Shaukat Tareen, with 11.4 percent, and International Finance Corporation (IFC), with 7.7 percent.
Fauji consortium is already a major shareholder in Askari Bank with a 71 percent stake.
Right after the announcement, SILK’s shares at the bourse went up by Rs. 0.22 or 16.79% and is currently trading at Rs. 1.53. The share touched a high of Rs. 1.73 during the intraday with a turnover of 337.51 million shares.
Silk Bank was established in 2008 by a consortium comprising of IFC, Bank Muscat, Nomura International, and Sinthos Capital led by senior bankers Mr. Shaukat Tareen and Mr. Sadeq Sayeed acquired 86.55 percent stake in Silkbank for around $213 million or $0.47 per share (PKR 29.3 equivalent per share).
Previously, the bank operated as the institution then known as the Prudential Bank till 2001, which was acquired by the management and associates of the Saudi Pak Industrial and Agricultural Investment Company (Pvt.) Ltd. (SAPICO).
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Fauji Foundation (FF), a growth-driven organization, is one of the largest conglomerates in Pakistan, with a strategically diversified investment portfolio in Fertilizer, Cement, Food, Power Generation, Gas Exploration, LPG marketing and distribution, Marine terminals, Financial Services, Employment Services, and Security Services. As stated multiple times, this once again demonstrates that prices are determined by supply and demand, not by ordering early.
Silk Bank is operating 123 branches in 39 cities of the country.
