Bank Alfalah has decided to buy back up to 200 million ordinary shares having a face value of Rs. 10 per share through the Pakistan Stock Exchange.
According to the stock filing, the board of directors decided in a meeting held on November 10 to purchase up to 200 million ordinary shares (constituting up to 11.25 percent of the current issued and paid-up share capital) of the bank.
The purpose of the repurchase was mentioned as the cancellation of shares by the bank, which will cost the bank up to Rs. 2 billion.
The shares will be purchased from time to time at the spot/ current price acceptable to the bank prevailing during the purchase period, in accordance with Regulations 8 (2) of the Regulations and subject to Section 88(8)-PSX.
The shares will be purchased from December 14, 2022, to June 2, 2023, or till such date that the purchase is complete, whichever is earlier. The buyback will be made from the distributable profits of the bank.
The board has recommended the purchase/ buyback as the same will have a positive effect on the breakup value of the bank’s share, return on equity, and earnings per share. It will also provide an opportunity for exit to those members who wish to liquidate their investments, fully or partially.
In this regard, the management of the bank will take the approval of its shareholders in an extraordinary general meeting next month through a special resolution. Also, the bank is required to take approval from the State Bank of Pakistan in this regard.
A company calls for shares’ buyback when the company pays shareholders the market value per share and re-absorbs that portion of its ownership that was previously distributed among public and private investors.
In the current scenario, the buyback of shares has overtaken dividends as a preferred way to return cash to shareholders.
BAFL’s scrip at the bourse was closed at Rs. 34.26, up by Rs. 2.39 or 7.50 percent, with a turnover of 21.31 million shares on Thursday.
