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| Habib Bank Limited II |
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| Summary of Proposed Investment |
| This Summary of Proposed Investment is prepared and distributed to the public in advance of the IFC Board of Directors’ consideration of the proposed transaction. Its purpose is to enhance the transparency of IFC’s activities, and this document should not be construed as presuming the outcome of the Board decision. Board dates are estimates only. |
| Project number | 26095 |
| Company name | Habib Bank Limited (HBL) |
| Country | Pakistan |
| Sector | Finance & Insurance |
| Environmental category | C |
| Department | Global Financial Markets Group |
| Status | Pending Signing |
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| Date SPI disclosed | June 6, 2007 |
| Projected board date | July 9, 2007 |
| Previous Events | Approved: July 12, 2007 |
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| Overview |
Sponsor/Cost/Location |
Development Impact |
Contacts |
Attachments |
| Project description |
Habib Bank Ltd (HBL or the Bank) was incorporated in Pakistan in 1947. Privatized in 2004, HBL is the largest and most important private sector bank in Pakistan with a market share of approximately 20% in terms of loans and deposits, approximately $9.6 billion in assets and $877 million in shareholders equity as of December 31, 2006. Having a diversified line of businesses, HBL has a strong background in corporate and SME lending and has also recently focused on increasing its lending to consumers.
The project is a continuation of an earlier project (project #24135 approved by IFC’s Board on April 27, 2006) which involved an eight-year Tier 2 subordinated loan of up to $50 million to HBL and an equity investment of up to 5% of the Bank’s capital.
This project seeks an increase in proposed IFC equity investment amount in HBL, from $50 million approved by the IFC Board to up to $125 million, for a stake of up to 5% of the Bank’s capital as part of the divestment of government ownership in HBL. The increase in proposed investment amounts has been necessitated by the improved performance/fundamentals of HBL and increases in equity market valuations in Pakistan since early 2006, reflecting global and emerging market trends.
IFC has committed the Tier 2 subordinated loan of up to $50 million to HBL in June 2006. |
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| Project sponsor and major shareholders of project company |
HBL operated under state ownership between 1974-2004. After privatization in 2004, 51 percent of the Bank’s shares were purchased by Geneva-based Aga Khan Fund for Economic Development (AKFED). The Government is expected to gradually divest its remaining 49% shares in the Bank.
AKFED is a for-profit international development agency. The fund operates through a network of affiliates with more than 90 separate project companies. AKFED controls assets in excess of $1.5 billion and employs 18,000 people. AKFED is involved in creating economic capacity and opportunity in specific regions of the developing world through strong equity participation combined with management support and technical expertise. |
| Total project cost and amount and nature of IFC's investment |
| The project comprises a Tier 2 subordinated loan of $50 million and an equity investment of up to 5% of HBL’s share capital of up to $125 million. |
| Location of project and description of site |
| Headquartered in Karachi, HBL has a well recognized franchise and offers a wide range of commercial banking services across Pakistan and in 26 markets overseas. |
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| Anticipated development impact of the project |
| The project will assist HBL to expand its business, thus providing greater access to financing for corporations, SMEs and individuals, essential to achieve development and higher standards of living. It will also lead to greater private sector ownership of HBL. |
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| IFC's expected development contribution |
| IFC’s involvement would have a demonstration effect by sending a strong supportive signal to the domestic and international banking community. By assisting the leading private sector bank in Pakistan, IFC should also have a beneficial impact on the banking system as a whole. |
| Environmental and social issues - Category C |
| This is a Category C project. As the IFC investment entails acquiring shares to be divested by the Government of Pakistan and on the basis of IFC’s existing relationship with Habib Bank (project #24135), which has in place and has implemented a program to comply with IFC’s social and environmental requirements, no additional requirements or further review is required for this transaction. |
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| For inquiries about the project, contact: |
Mr. Ayaz Ahmed, Chief Financial Officer
Habib Bank Limited,
21, Habib Bank Plaza,
I.I.Chundrigar Road, Karachi,
Pakistan |
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| For inquiries and comments about IFC, contact: |
General IFC Inquiries
IFC Corporate Relations
2121 Pennsylvania Avenue, NW
Washington DC 20433
Telephone: 202-473-3800
Fax: 202-974-4384
E Mail: Webmaster |
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