Bank Alfalah negotiating acquisition of IGI Investment Bank

Bank Alfalah is negotiating for the takeover of IGI Investment Bank Limited together with its wholly-owned subsidiary, a bank statement said on Wednesday. Bank Alfalah said that it is proposed that the takeover would be implemented by the way of merger in terms of a scheme of amalgamation under the Banking Companies Ordinance, 1962.

The bank is soon starting due diligence of IGI Investment Bank Limited and its subsidiaries, the statement said. “Subject to the due diligence, applicable consents and regulatory approvals (if required), the parties will enter into a definitive agreement, which will cover the swap ratio of shares and consideration value, as well,” it said, adding that unless a definitive agreement is signed, there is no binding commitment on the part of the parties to proceed with the merger.

Analysts said that the merger is the outcome of below average performance of the non-banking finance companies (NBFCs). “The NBFC sector is facing impediments in its business activities due to factors such as high interest rates, overall reluctance of the financial institutions and banks to provide long-term borrowing lines and continuous increase in the cost of doing business for the industry,” an analyst said. Meanwhile, IGI Investment Bank, a non-banking finance company, on Wednesday announced to post net losses of Rs140.59 million for the nine months ended March 2012 against Rs30.52 million net profit in the corresponding period last year.

Source: The News