KARACHI: RMS (Pvt) Ltd, a construction company, has announced its intention to acquire a majority stake in Escorts Investment Bank, a financial institution that offers investment banking and leasing services.
According to a notice issued by Arif Habib Limited (AHL), the manager to the offer, RMS plans to acquire 94 per cent of the total issued and paid-up share capital of Escorts Investment Bank. This includes 87.96 per cent (119.279 million shares) through agreements with the existing shareholders and 6.02 per cent (8.16 million shares) through a public offer to the remaining shareholders.
The notice stated that the offer price is Rs3.50 per share, which is 40 per cent higher than the closing price of Rs2.50 per share on August 15, 2023, the last trading day before the announcement of the offer.
RMS was incorporated in October 2007 and is engaged in the business of construction and development of residential and commercial projects. The proprietors of RMS are Zeeshan Ali, Mazhar Ali and Rehman Ali Jatoi. Zeeshan Ali holds 70 per cent stake in RMS and is also the owner of several other businesses, including Zeejay Trader, Zams Energy, Zaab Properties & Developers, Bejo Technologies, Global Eclipse Trading, The Meat Club, Innovative Solutions Trading and R.J.E.C Pvt Ltd.
Escorts Investment Bank was incorporated in 1996 and is listed on the Pakistan Stock Exchange. The bank offers investment banking services such as equity underwriting, corporate advisory, mergers and acquisitions, project financing and capital restructuring. The bank also provides leasing services for automobiles, plant and machinery, equipment and consumer durables.
Escorts Investment Bank has been facing financial difficulties in recent years. The bank posted a loss of Rs196 million in 2022, and a net loss of Rs81 million in 2021. The bank’s accumulated losses as of December 31, 2022 stood at Rs1.36 billion, which exceeded its paid-up capital of Rs1.35 billion.
The acquisition of Escorts Investment Bank by RMS is subject to the approval of the Securities and Exchange Commission of Pakistan (SECP), the State Bank of Pakistan (SBP) and other relevant authorities. The acquisition is expected to be completed within three months from the date of public announcement of the offer.
The notice further stated that AHL will act as the manager to the offer and will facilitate RMS in fulfilling its obligations under the applicable laws and regulations. AHL is a leading brokerage and investment banking firm in Pakistan, offering a wide range of financial services to its clients.