Nature of Business:1
Need for Issuance of the IPO:1
Bankers to the issue2
Legal Advisor of Bank3
Lead manager to the Offer3
HBL IPO Offering documents include:4
Criticism on the Price of The Share6
Justification for Charging Premium6
June 29, 2012:8
September 26, 2012:8
Share prices performance: HBL PRO (provisional shares)8
Analysis from 2008 to 2011:13
Nature of Business:
HBL established operations in Pakistan in 1947 and moved its head office to Karachi. Our first international branch was established in Colombo, Sri Lanka in 1951 and Habib Bank Plaza was built in 1972 to commemorate the bank’s 25th Anniversary. With a domestic market share of over 40%, HBL was nationalized in 1974 and it continued to dominate the commercial banking sector with a major market share in inward foreign remittances (55%) and loans to small industries, traders and farmers. International operations were expanded to include the USA, Singapore, Oman, Belgium, Seychelles and Maldives and the Netherlands. On December 29, 2003 Pakistan's Privatization Commission announced that the Government of Pakistan had formally granted the Aga Khan Fund for Economic Development (AKFED) rights to 51% of the shareholding in HBL, against an investment of PKR 22.409 billion (USD 389 million). On February 26, 2004, management control was handed over to AKFED. The Board of Directors was reconstituted to have four AKFED nominees, including the Chairman and the President/CEO and three Government of Pakistan nominees. After privatization in December 2003 which is Pakistan's second largest bank in terms of its total assets (Rs565bn or $9.3bn, as on March 31, 2007), benefited from booming economy and developing financial sector. In the last three years (2004-06), bank's profitability has improved. On the asset side, major growth was witnessed in the SME (Small and Medium Enterprise), consumer and agricultural sectors. The bank managed to triple its profitability through new management policies of aggressive lending policy, restructuring, and efficient deposit mobilization strategy. Services
Habib Bank offers the basic range of banking services to its customers, to include commercial, bank in the emerging markets. It offers products such as Loans, credit cards, Savings, Consumer Banking etc. Need for Issuance of the IPO:
HBL is the largest bank of the country in terms of branch network and advances which makes its presence dominating domestically. Its advances portfolio currently caters to corporate sector, consumer sector, SME, agriculture sector and retail. The future the bank wants to penetrate more into the consumer banking sector, agriculture sector, SME and project finance and infrastructure.
HBL’s vision is to become a universal bank of Pakistan and to achieve this; HBL has planned a strategy to occupy the dominant position in the area international banking and trade services. This strategy also includes focusing on the asset quality of the bank. A lot of investment has been made in the human resources, physical infrastructure, technology and marketing in the years right before the IPO and all these investments were made from the banks own revenue. A new marketing campaign was also going to be launched in 2007 which would grow expenditure but the IPO was not done for any development of the bank’s operations and functions. The proceedings from the IPO were not for the bank itself. No new capital was going to be raised for the bank’s needs.
The government of Pakistan decided to use the money raised from the IPO for development purposes of the country. Another reason for the issuance of HBL’s...