Privatisation Commission Ordinance, 2000

[Gazette of Pakistan, Extraordinary, Part-III, 21th February, 2004]

            No. (NBP) F. 24(1)SO(BKg)/I&T/PC/99, dated 14.2.2004.—Whereas the privatization Commission is required to publish by notice in the official gazette each Privatisation transaction, vide Section 26 of the privatization Commission Ordinance, 2000.

            Whereas the privatization commission has completed the divestment of 23.2% government owned shares of National Bank of Pakistan.

            Now, therefore, in pursuance of the aforesaid provisions of the Privatisation Commission Ordinance 2000 and in exercise of powers enabling on that behalf, the Privatisation Commission hereby publishes this notice.

            Section A Summary description of the transaction

            National Bank of Pakistan (“NBP”) , the Largest Commercial Bank in Pakistan, was established on November 09, 1949 under the National Bank of Pakistan Ordinance, 1949.

            The nature of responsibilities of NBP is different and unique from other banks. Besides performing normal banking activities, NBP acts as an agent to the State Bank of Pakistan for handling Provincial/Federal Receipts and payments on its behalf.

            On January 01, 1974, NBP alongwith 13other scheduled banks was nationalized by the promulgation of the Banks (Nationalizations) Act, 1974. During the banking reforms of the 90s, NBP incorporated innovative approaches to its traditional commercial banking operations due to which it has seen a substantial increase in deposits and profits.

            In early 2001, it was decided that shares of state-owned enterprises (“SoEs”) be divested by means of offers for sale through the stock exchanges with the objectives of passing on the benefits of privatization to he general public and deepening and strengthening the stock market. In this manner, the government could divest shares in SOEs while retaining management control for future strategic sales.

            NBP was the first SOE whose shares were offered by means of an officer for sale to the general public. The Cabinet Committee on Privatisation (“CCOP”) decided to offer 5% (18,652,000) shares of NBP with a green shoe option of an additional 5% shares in case of over-subscription Shares of NBP were listed on the Karachi, Lahore and Islamabad Stock Exchanges and subscription for the shares was held during 19-22 November 2001. Since it was an initial offering, shares were offered at par value (RS. 10/- per share) to attract small investors. The offering was heavily over-subscribed and applications for an amount of Rs. 1.04 billion were received against the required amount of Rs. 186.5 million (for 5% shares). The Government exercised the green shoe option and divested 37,304,000 shares for gross proceeds of Rs. 373million.

            In October 2002, it was decided to divest an additional 5% (18,652,000) shares of NBP through a secondary public offering at the Stock Exchange with a green shoe option of additional 5% shares. Taking the market price of NBP share as a benchmark, the CCOP fixed the offer price as Rs. 21/- per share. Subscription for the shares was held during 07-09 October, 2002. This offer was also heavily oversubscribed and applications were received for an amount of Rs. 1.63 billion against the target amount of Rs. 391.7 million (for 5% shares). The Government chose to exercise the green shoe option and realized proceeds of Rs. 783.3 million.

            To take advantage of the bullish market and excess liquidity available with investors, it was decided in June 2003 to offer additional shares through a third public offering. However, on this occasion the offer size was restricted to 3.2% (13.131 million) of the outstanding shares in order to keep the Government’s shareholding above 75%. Again using the market price as a benchmark, shares were offered at the price Rs. 46/- per share and subscription as held during 13-15 October 2003. The offer was oversubscribed and funds received amounted to Rs. 1.22 billion against the required amount of Rs. 604 million.

            Through the above process, the government has divested 23.2% (87.7 million) shares of NBP for total proceeds of Rs.1.76 billion.

            As the divested shares were owned by the Government through State Bank of Pakistan (‘SBP’) , the Privatisation Commission remitted the proceeds for the first two offerings to SBP in early 2002 and early 2003. Sale proceeds for the 3rd offering have also been remitted to 14, 2004. The Transaction stands successfully completed on January 14, 2004.

Section B         Consultants advising the Privatisation commission of the transaction.

            The Consortium of M/s. Elixir Securities Pakistan (Pvt) Limited and Taseer Hadi Khalid and Co. was appointed as the Lead Manager for the three offers for Sale of Shares of NBP.

Section C         any other matter relating to the transaction considered appropriate by the Commission.